Due to the uncertainty of the reciprocal tariffs proposed by Trump, the inflation risk in Malaysia has slightly increased, according to a report by Kenanga IB economists. They believe that domestic price pressures remain controllable, but with the imminent removal of RBOB Gasoline subsidies, adjustments in water and electricity prices, and increased Insurance rates, price pressures may rise in the second half of the year. They stated that although trade tensions have heightened market speculation regarding a possible interest rate cut in the fourth quarter, it is expected that the Malaysian central bank will keep interest rates unchanged, thanks to stable inflation and resilient economic growth. They noted that while Trump's tariff policy could impact inflation and economic growth, the effects on Malaysia should be smaller compared to other countries in the region. Kenanga maintains its inflation forecast for Malaysia at 2.7% for 2025, higher than 1.8% for 2024.