Inflation picked up sharply to 1.8% y/y in April (March: 0.9%), in line with our forecast but below consensus. The rise was broad based, reflecting the implementation of the GST in April, with all categories bar transport showing a significant increase in price growth.BNM had already flagged that inflation will likely trend higher over the rest of the year. However, given the administrative nature of the April pickup, analysts think it is unlikely to affect the monetary stance, as underlying inflation should remain contained. Barclays forecasts 2015 inflation at 2.1%, down from 3.1% in 2014, considering the sharp fall in retail pump prices in Q1.BNM to keep rates on hold through most of 2015, and forecast only one 25bp rate hike in Q4 15, after the US Federal Reserve has started its own rate hike cycle, expects Barclays. Analysts see risks of this forecast rate hike being pushed out to 2016.
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