Bnm Review Interest Rate

ISSUE TOPIC:

Bank Negara Malaysia (BNM) To Review Interest Rate; Rise or Reduce?

1.0 INTRODUCTION

Interest rates are among the most closely watched variable in the economy. Their movement are reported almost daily by the news media because the directly affect our everyday lives and have important consequences for the health of the economy.

In Malaysia, Bank Negara Malaysia (BNM) is bodies to monitoring and ensuring the interest rate are rise or reduce. It is influence based on gross domestic product (GDP) and current inflation.

2.0 ISSUES

Factors influence on Interest Rate

1. Malaysia GDP Annual Growth

The gross domestic product (GDP) is one the primary indicators used to gauge the health of a country's economy. It represents the total ringgit value of all goods and services produced over a specific time period. Usually, GDP is expressed as a comparison to the previous quarter or year. Below is a chart with historical data for Malaysia GDP Annual Growth Rate.

The Gross Domestic Product (GDP) in Malaysia expanded 5.40 per cent in the second quarter of 2012 over the same quarter of the previous year. Historically, from 2000 until 2012, Malaysia GDP Annual Growth Rate averaged 4.58 Per cent reaching an all-time high of 10.10 Per cent in March of 2010 and a record low of -6.20 Per cent in March of 2009. The annual growth rate in Gross Domestic Product measures the increase in value of the goods and services produced by an economy over the period of a year. Therefore, unlike the commonly used quarterly GDP growth rate the annual GDP growth rate takes into account a full year of economic activity, thus avoiding the need to make any type of seasonal adjustment (Source: www.tradingeconomics.com).

2. Inflation

 When we think and define of inflation, we think of rising prices instead of the actual causes of inflation. However, Inflation is when the prices of most goods and services continue to creep upward. When this happens,...