This is the start of a hiking cycle. A series of small hikes will follow until inflation falls below 3%.

Inflation is still higher than nominal interest rates, and this is a clear sign that monetary conditions are highly accommodative in Malaysia and the need for interest rates to return to a neutral level.

Inflation is still a real and present threat to the economy.

The first half of the year will be solid as the momentum we have seen in the last two quarters will carry growth over to the first half of 2006.

It should not be introduced at high levels, where it will shock the economy. Instead, the GST should be gradually eased in and the list of taxable goods expanded over time.

The basic conclusion is that 1999-2000 will bring further gains in corporate profits, mild-mannered inflation and a generally favorable outcome for equity prices. Increasing confidence that the economic expansion will continue through our newly-extended forecast horizon encourages a modest upward revision in stock price targets.