KUALA LUMPUR, June 27 — BMI Research is estimating Malaysia’s inflation rate to be 2.6 per cent in the second half of 2018 or down from the 3.2 per cent previously forecast.

The Fitch Group unit cited benign inflationary environment in the first quarter, which it said would prevail over the year.

It added that the development would remove pressure on Bank Negara Malaysia to raise the interest rate beyond the 25 basis point increase from earlier this year.

"We are no longer expecting Bank Negara Malaysia (BNM) to hike interest rates by an additional 25bps (basis points) in 2018, bringing our forecast for the Overnight Policy Rate (OPR) down to 3.25 per cent from 3.50 per cent previously,” BMI Research said.

It also cited the uncertainty and improved prospects following Pakatan Harapan’s general election victory.

PH zero-rated the Goods and Services Tax (GST) this month and gave Malaysians a tax holiday until the reintroduction of the Sales and Services Tax (SST) in September.

The coalition also campaigned on lowering living costs for Malaysians and is expected to formulate policies in this direction.