Petrol subsidy removal will not cause inflation, says Zeti

KUALA LUMPUR: The removal of subsidies for RON95 petrol and diesel will not have any inflationary consequences to the country's economy as global crude oil prices are softening, says Bank Negara Malaysia (BNM) Governor, Tan Sri Dr Zeti Akhtar Aziz.
She described the move as a "very positive development" for the economy as consumers will benefit from lower prices.
"Obviously, this is a very positive development.
"It also helps the government in terms of the burden of the subsidy in the budget," she told reporters, after the launch ceremony of the expansion of SWIFT's Kuala Lumpur Corporate Services Centre, here today.
The event was graced by Princess Astrid of Belgium.
Asked if monetary policy would be reviewed following the float managed system pricing for fuel, Zeti said the central bank would need to look at the overall effect of the risk to inflation and other developments in respect of growth.
"These are the main two factors that we will look at over the medium-term. Right now, it doesn't change the outlook," she added.
The government last Friday announced that the retail prices of RON95 petrol and diesel would be fixed on a managed float system from Dec 1.
It may also consider introducing a multi-tiered targeted fuel subsidy mechanism later, if oil prices spike again. The move is to help deal with the rising cost of living for the mid-to-lower-income groups. – Bernama