Headline Inflation in March Remained Stable At 2.2% In March

BNM said that Headline inflation was unchanged at 2.2%  in March (February: 2.2%), mainly reflecting lower fuel inflation which was offset by higher core inflation.

In releasing its Monetary and Financial Developments in March 2022, BNM said that Core inflation[1] was higher at 2.0% (February: 1.8%), due to higher inflation in food away from home, jewelry, and other services for personal transport equipment.

On wholesale and retail trade in February, BNM said that The Index of Wholesale and Retail Trade (IOWRT) grew by 3.8% in February 2022 (January: 3.4%).

It said that the The higher growth was driven mainly by the retail segment. Improvement in retail was broad based across most components, with the exception of retail sale of information & communication equipment (-3.2%; January: -0.8%).

BNM said that on a month-on-month seasonally adjusted basis, growth accelerated to 4.9% (January: 1.3%). This was amid reopening of the economy and better labour market conditions, which had provided support to household spending.

BNM said that net financing in the month of Marchgrew by 4.6%, amid lower growth in outstanding corporate bonds (4.6%; February: 5.0%).

It said that growth in outstanding household loans was stronger at 4.9% (February: 4.7%), reflecting growth across all purposes, as loan disbursements growth picked up (10.2%; February: 3.1%).

For businesses, BNM said that outstanding loan growth was lower (4.5%; February: 5.5%) amid lower growth in working capital financing. Nonetheless, growth in working capital loan disbursements remained strong (12.4%; February: 19.8%; 2017-19 average: 4.8%), despite some base effects from higher disbursements in March 2021.

On Domestic financial markets In March, it said that it was  driven by tighter global financial conditions and geopolitical developments

It said in March, global financial market sentiments were affected by faster-than-anticipated monetary policy normalisation path by the US Federal Reserve and the conflict in Ukraine. The corresponding broad US dollar strength during the month also resulted in a marginal depreciation of the ringgit.

It said that Domestic financial market conditions tightened, following the increase in 10-year MGS yields by 20.6 basis points, and the decline in the FBM KLCI by 1.3%.

BNM said that despite the weaker financial market performance, adjustments remained orderly amid sufficient trading liquidity.

On the banking system, it said that banks maintained strong capitalisation levels, with excess capital buffers[3] of RM125.5 billion as at March 2022.

It said that capital ratios declined marginally, mainly driven by valuation adjustments on available-for-sale financial instruments amidst rising bond yields.

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