KUALA LUMPUR, Feb 25 — RHB Research Institute expects headline inflation to be within 1.5 per cent to 2.5 per cent in 2019, compared to one per cent in 2018, due to the recovery in global oil prices.

In a note today, the research firm said oil prices were gradually recovering this month due to production cuts imposed by the Organisation of the Petroleum Exporting Countries (Opec).

The group has reiterated their commitment to curbing the oil production, a move which would see a rally in the oil price.

“We believe inflationary pressure should begin picking up in the second half of the year due to higher fuel prices and the low base created by the tax holiday last year (Jun-August 2018),” it said.

Overall, inflationary pressure has become more subdued in recent months aided by the drop in fuel prices.

Core inflation moderated to 0.2 per cent year-on-year in January 2019, from +0.4 per cent in the previous month and +0.5 per cent in November 2018.

As for the overnight policy rate, RHB opined that Bank Negara Malaysia would keep it at 3.25 per cent for 2019 to maintain the ringgit stability.

“Although there appears to be some room for policy easing amid a subdued inflationary and slower growth environment, the current interest rate level remains accommodative and would help stem capital outflows and keep the stability of the local currency, “ it added. — Bernama