2 Poon and Tong (2009) examined the feasibility of inflation targeting practices in Malaysia by
testing the cointegration relationship among CPI, money supply, money market rate and exchange
rate of the Malaysian economy from 1976:M1 to 2007:M12. Results reveal that inflation targeting
may not be feasible for Malaysia at the moment due to its economic and political structure. Among
the monetary tools, the interest rate (the others being exchange rate and money supply) offers a
faster rate of adjustment.