UPDATE 6.30 a.m. July 25: Reading the report High inflation rate pressures BNM to raise rates so soon after that release of information on the CPI numbers for June, 2008 tells me 2 things. First, Bank Negara and the government machinery had intended all along to increase interest rates. They are careful to manage mindsets by releasing alarming CPI numbers first and, then, announce interest rate increases. Second, the federal govt has learned from the fuel price increase debacle to be careful in managing mindsets and conceal their true intent by deflecting attention; in this case, the strategy is tell the rakyat some very bad news on inflation, then slip in the increase in interest rates.
All that is par-for-the-course, all govts do that. The question that I hope real economists can help to answer (I'm only an armchair one!) is, how the federal govt can manage consumer price inflation using interest rate hikes. Can anyone help enlighten us?
Read the Star Online on CPI for June surges to 7.7%. This, more realistic, indicator comes after the government admitted that the Malaysian CPI does not accurately reflect the correct mix of consumer goods; see Malaysia reviews consumer price index amid criticism it doesn't accurately measure inflation.
As certain PAS factions continue their talks with UMNO about Malay unity, Malaysians, especially those families earning RM3,000-00 a month, or less, are UNITED in facing the precipice of desperate financial straits.
So, which is more important? Most Malaysians know the answer, but some Malaysian politicians think the other issue is more important.