Analysts expect Bank Negara Malaysia (BNM) to hold the overnight policy rate (OPR) steady at 3.0 per cent until year-end due to easing inflation.
Alliance Research said the current rate will continue to be at an accommodative level to promote growth and ensure adequate levels of price stability.
Malaysia's inflation rate eased further to 1.3 per cent year-on-year in September, the lowest level since February 2010, driven mainly by moderation in food inflation which offset higher transport cost.
In a note yesterday, the research firm also said the moderation could be attributed to the high base effect from the subsidy rationalisation exercise a year ago as well as moderation in commodity prices.
"Given its low levels, we believe inflation risks are minimal, ensuring that it is not a concern for the central bank.
"Nonetheless, BNM would be closely monitoring the impact of the quantitative easing in the US and Japan, and avert any destabilising effect on the domestic economy," it added.
Hong Leong Investment Bank (HLIB) expects the inflation rate for the fourth quarter to remain benign at the consensus estimate of 1.4 per cent in the absence of major changes in administrative prices.
Given the lower-than-expected food inflation, HLIB is lowering its inflation forecast for 2012 by 0.01 percentage point to 1.7 per cent while for 2013, the consumer price index (CPI) increase is expected to edge higher to two per cent.
"We expect similar mild inflation trend to persist in the first half of 2013 on account of stable commodity price and no change in administrative prices," it said.
It noted subsidy removal is expected to resume in mid-2013 with price hikes for fuel, electricity and natural gas, adding this would cause the CPI growth to jump in the second half of 2013.
Meanwhile, OSK-DMG Group Economics is maintaining its 2012 inflation rate forecast at 1.7 per cent and 2.5 per cent for 2013, respectively, though the risk is expected to remain on the upside next year.
It noted inflationary pressure could pick up next year due to subsidy cuts which should come after the general elections and resilient domestic demand.
OSK-DMG believes BNM could respond to rising inflationary pressures by hiking the policy rate by 50 basis points to 3.5 per cent in 2013.
Nevertheless, Kenanga Research is maintaining its 1.9 per cent CPI forecast for 2012 and does not expect any subsidy cuts for fuel prices so close to the election or even too soon afterwards.
"A mild spike in the food index is expected from November onwards due to the slight reduction of subsidy of sugar. However, that would not be enough to bump up the overall CPI," it said.