KUALA LUMPUR, Jan 23 (Bernama) -- Bursa Malaysia’s benchmark index recouped earlier losses to settle higher, maintaining a more than six-year high, buoyed by continued buying interest in technology stocks, while the strengthening of the ringgit against the US dollar further lifted investor sentiment. At 2.27 pm today, the local currency strengthened to 3.9992 versus the greenback, its strongest level in more than seven years. It was last seen at this level on June 18, 2018, at 3.9960/9990. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 2.85 points or 0.17 per cent to 1,719.99 from yesterday’s close of 1,717.14. The index surpassed its previous peak of 1,719.00 recorded on Feb 26, 2019. The barometer index opened 1.30 points lower at 1,715.84 and moved between an intraday low of 1,711.89 in early trade and a high of 1,723.41 in late afternoon before slipping slightly toward the close. However, market breadth was negative with decl...
A closely watched US inflation report due Thursday is expected to reinforce the Federal Reserve’s cautious stance, with price pressures easing only gradually and still running above the central bank’s comfort zone.
What the Market Expects
Economists forecast that the personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, will show little change in momentum.
Core PCE (ex-food & energy):
+0.2% MoM
+2.8% YoY
Headline PCE:
+0.2% MoM
+2.8% YoY
If confirmed, inflation would be moving sideways, not accelerating — but still well above the Fed’s 2% target.
Why This Matters for Policy
Core PCE tends to adjust more slowly than CPI, and recent data suggest inflation cooled only modestly toward the end of 2025. While consumer inflation closed December at 2.7%, PCE readings point to stickiness rather than renewed disinflation.
Economists note that:
Inflation ran hot but stable in late 2025
Seasonal adjustments and data distortions from last autumn’s government shutdown could still revise recent prints
Progress is visible, but not decisive enough to justify an imminent rate cut
Encouraging Signs Beneath the Surface
Despite the sticky headline numbers, underlying pressures appear to be easing:
Wage growth has slowed sharply, returning close to pre-pandemic levels
Cooling wage gains reduce the risk of persistent services inflation
Housing-related costs are expected to soften further in 2026
These trends support the view that inflation is not re-accelerating, even if it remains stubborn.
Fed Outlook: Patience Over Action
For policymakers at the Federal Reserve, the message is clear:
Inflation is not worsening
But it is not cooling fast enough to force a policy pivot
As a result, officials are likely to treat the November PCE report as informative, not decisive, keeping rates unchanged while waiting for clearer confirmation that inflation is heading sustainably toward target.
Market Pricing
Investors are already aligned with this view:
Markets assign a ~95% probability that the Fed keeps rates on hold at next week’s policy meeting
Attention will quickly shift to December and January inflation data, which may better reveal whether remaining price stickiness is finally breaking.
Investor Takeaway
No inflation shock expected from PCE
Fed likely stays on hold, reinforcing a data-dependent stance
The path to rate cuts remains slow and conditional, not imminent
Thursday’s PCE report may confirm progress — just not enough to move policy yet.
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