Headline inflation was stable at 4.0% in November

• Headline inflation was stable at 4.0% in November (October: 4.0%) as the increase in core inflation was offset by lower inflation in other categories, namely fuel and fresh food.
• Core inflation increased slightly to 4.2% (October: 4.1%) due mainly to the increase in prices for food away from home.

Continued manufacturing production growth in October 2022

• Manufacturing IPI expanded in October 2022 by 4.2%.
• Growth was driven mainly by the E&E cluster which recorded above average growth at 8.7% (2016-2019 avg.: 6.2%).
• The primary cluster, particularly refined petroleum products production, also supported growth with resumption of operations at an existing oil refinery that was previously under maintenance.

Net financing moderated, as repayments outpaced disbursements

• Net financing grew by 4.7% as at end-November (October: 5.7%), reflecting lower growth in both outstanding loans (5.5%; October: 6.5%) and corporate bonds (2.6%; October: 3.6%).
• Household loan growth moderated to 6.0% (October: 6.3%) as loan repayments growth outpaced that of disbursements across major loan purposes.
• Outstanding business loan growth moderated to 3.4% (October: 5.2%), due mainly to strong growth in repayments among large firms. Loan disbursements continued to record double-digit growth (13.7%; October: 13.4%), despite some moderation in growth in the consumer manufacturing and real estate sectors.

Domestic financial conditions eased amid improved investor sentiment

• Global financial conditions eased following expectations for a slower pace of monetary policy tightening as inflation continued to show signs of peaking, especially in the US. Easing of COVID-19 restrictions in China also supported the overall investors’ risk sentiment.
• Consequently, domestic financial conditions eased, with the 10-year MGS yields declining by 26 bps (regional average*: -44.4 bps) and the FBM KLCI rising by 1.9% (regional average*: +5.2%). Financial markets’ performance was also supported by improved political certainty following the formation of the new Government.
• The ringgit appreciated by 6.3% against the US dollar, in line with a broad-based appreciation in major and regional* (average: +4.5%) currencies against the US dollar.

Banks maintained strong liquidity and funding positions to support intermediation

• The banking system’s Liquidity Coverage Ratio remained healthy. Banks are proactive in managing their buffers to address the year-end seasonal fluctuations in banking system liquidity and continue to be supportive of intermediation.
• The aggregate loan-to-fund ratio remained largely stable at 82.3% (Oct-22: 82.0%).

Asset quality in the banking system remained intact

• Overall gross and net impaired loans ratios remained unchanged at 1.8% (Oct-22: 1.8%) and 1.1% (Oct-22: 1.1%), respectively.
• Loan loss coverage ratio (including regulatory reserves) continues to record a prudent level of 116.5% of impaired loans, with total provisions accounting for 1.8% of total loans.

Monthly Highlights [PDF]

^*Regional countries comprise Singapore, Thailand, Philippines, Indonesia and Korea