It is the Governing Council’s view that, at the policy-relevant medium-term horizon, there are upside risks to the outlook for price developments. These risks include the possibility of renewed increases in commodity prices and of previous rises having further and stronger indirect effects on consumer prices. There is particularly a very strong concern that the emergence of broad-based second-round effects in price and wage-setting behaviour could add significantly to inflationary pressures. Moreover, the upside risks to price stability could be aggravated by unexpected rises in indirect taxes and administered prices. Against this background, it is imperative to ensure that medium to longer-term inflation expectations remain firmly anchored at levels in line with price stability. Broad-based secondround effects stemming from the impact of higher energy and food prices on price and wagesetting behaviour must be avoided. The Governing Council is monitoring price-setting behaviour and wage negotiations in the euro area with particular attention. All parties concerned – in both the private and the public sectors – must meet their responsibilities in this regard. The Governing Council has repeatedly expressed its concern about the existence of schemes in which nominal wages are indexed to consumer prices. Such schemes involve the risk of upward shocks in inflation leading to a wage-price spiral, which would be detrimental to employment and competitiveness in the countries concerned. The Governing Council calls for these schemes to be abolished. The monetary analysis confirms the prevailing upside risks to price stability at medium to longer-term horizons.

More than half of the industry today is made up of MSB companies with annual turnovers of at least RM50 million, compared to only a third of the industry operating at this level 6 years ago. The public can conduct money changing and remittance transactions at over 2,500 locations nationwide, more than double the number of access points in 2011. An increasing number of companies are also offering online options for customers to conduct remittance and money changing transactions. The Bank is also happy to note that the industry received a positive assessment under the most recent mutual evaluation exercise conducted on Malaysia by the Asia Pacific Group (APG) on Money Laundering. As you know, the APG is an international organisation committed to the implementation and enforcement of international standards against money laundering and the financing of terrorism, working closely with organisations like the Financial Action Task Force, the International Monetary Fund and the World Bank. The assessment is a rigorous process, so a positive assessment is something that the industry can take great pride in. In its most recent 2015 report, the APG specifically noted that mitigation of money laundering and terrorist financing risks in the MSB sector has improved significantly in recent years, while acknowledging that there are challenges among smaller companies that we are collaborating together with the industry to address. One of the key steps that we are taking is to provide compliance officers with appropriate training, and then supporting them to be professionally accredited.