Bank Negara said today it expects inflation to ease in the second half of 2009 if fuel prices remain at current levels.

An unpopular 41-percent fuel price hike earlier this month has sparked concerns the central bank will review its interest rates with rising prices expected to push up inflation and slow growth.

zeti akhtar aziz But governor Zeti Akhtar Aziz said Bank Negara would not review its rates if inflation tapered off by the second quarter of 2009.

"If no further adjustments are made, inflation will taper off in the second half of 2009," Zeti told reporters on the sidelines of the World Economic Forum on East Asia in Kuala Lumpur.

"If that is the case, it may not be necessary to consider a monetary policy response," she said, adding that the bank would only review rates in July, after studying the impact of the fuel price hike on inflation.

"We have no intention to call any unscheduled... monetary policy meeting.

"We will have to take into account there will be some moderation in growth and we also have to monitor to what extent higher costs are being passed on to consumers," she said.

The government has been scrambling to soften the impact of increased fuel prices by giving cash rebates and announcing a slew of cost-cutting measures to help consumers cope. It has also promised there will no further fuel price increases this year.

Zeti said the economy could grow at a lower pace of 5.0 percent for the year, from 6.3 percent in 2007.

She also said the money market and the bond market should remain orderly as there was ample liquidity in the country's financial system.