Interest rate not only answer to curb rising prices, Zeti

KUALA LUMPUR, April 25 (Bernama) - Fiddling with interest rates is not the only answer to curb rising prices, Bank Negara Malaysia's governor Tan Sri Dr Zeti Akhtar Aziz said Friday.Zeti also said that the current increase in prices was due to the structural impact related to supply and demand.She said this when asked whether the central bank will fiddle with the interest rates to curb rising prices.According to Zeti, the current level of interest rates is supportive of growth because it has not dampened consumption and investment activitiesThere is still loan demand for households, small and medium enterprises (SMEs), and other businesses, she said.Zeti said funds were still being raised in the domestic bond market and through sukuk (Islamic bond)."All this reflects that it (the interest rate level) is supportive of growth at this point in time," she said.Asked about the impact on inflation with food prices increasing, Zeti said inflation may increase by three percent "but we expect on the average it will be 2.5 to three percent"."Nevertheless, we are monitoring the new developments where there are increasing shortages of food. It is phenomenal experience globally, and it is being addressed," she said."So the final outcome will be determined on how we address the situation. It has been identified as a key priority area in most countries and the final outcome will depend on how successful the efforts are."Asked whether the countrys growth would be affected with the government delaying some of the projects, Zeti said as the government had made allocations and was committed to disburse the allocations to promote development and growth, there will be no major impact.On the ringgit, Zeti said the local currency was moving in an orderly manner, which was important for international trade, foreign direct investment and portfolio investment.






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