Interest Rate in Malaysia
Malaysia - Interest Rate
Bank Negara Malaysia slashes rate to all-time low in July to support economic recovery
At its 7 July meeting, the Monetary Policy Committee of Bank Negara Malaysia (BNM) cut the overnight policy rate (OPR) by 25 basis points to 1.75%, an all-time low. Likewise, the ceiling and floor of the OPR corridor were reduced to 2.00% and 1.50%, respectively. The move had been largely expected by market analysts and marked the fourth cut so far this year.
The decision to broaden monetary stimulus intends to accelerate the rate of economic recovery in the second half of the year as the economy emerges from the Covid-19 shock. Although financial conditions have stabilized domestically and abroad, labor market weakness and postponed expenditure by households and businesses pose downside risks to the recovery ahead. Moreover, annual consumer prices fell 2.9% in May (April: -2.9%), marking a three-month disinflationary trend, thus providing the Bank with enough room to broaden monetary stimulus.
Looking at the forward guidance provided by the BNM, in its press release the Bank maintained a dovish tone, signaling that it remains prepared to take additional measures in order to ensure a sustainable economic recovery. In addition, the Bank expects inflation to be muted for the remained of the year amid low commodity prices.
With regards to the outlook for monetary policy, analysts at Nomura noted:
“We reiterate our forecast that BNM will cut again by 25bp at its next MPC meeting in September to 1.5% (there are only two remaining MPC meetings this year – September and November). We believe activity data and headline inflation will still likely disappoint official forecasts even after the relaxation, as a quick return to normal conditions is unlikely because of the remaining strict guidelines, as well as the negative spillover effects from weak exports and the tourism sector to the rest of the domestic economy. [...] We reiterate our 2020 GDP growth forecast of -5.8% y-o-y from 4.3% in 2019, which is below the latest official forecast range of -2.0% to 0.5%.”
The next monetary policy meeting will be held on 10 September.
FocusEconomics panelists are still assessing the latest developments.
Malaysia - Interest Rate Data
|Policy Interest Rate (%)||3.25||3.00||3.00||3.25||3.00|
5 years of economic forecasts for more than 30 economic indicators.
Malaysia Interest Rate Chart
Source: Malaysia Central Bank.
|Bond Yield||3.32||0.15 %||Dec 31|
|Exchange Rate||4.09||0.0 %||Jan 01|
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July 9, 2020
Industrial production fell 22.1% year-on-year in May (April: -32.0% yoy).
July 7, 2020
At its 7 July meeting, the Monetary Policy Committee of Bank Negara Malaysia (BNM) cut the overnight policy rate (OPR) by 25 basis points to 1.75%, an all-time low.
July 1, 2020
The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, jumped to 51.0 in June from May’s 45.6, and marked the highest reading since September 2018.
June 29, 2020
Merchandise exports plunged 28.5% in annual USD terms in May, surpassing April’s 27.9% fall, and marking the sharpest fall since July 2009.
June 24, 2020
Consumer prices rose a seasonally-adjusted 0.3% in May over the last month, rebounding from April's 2.7% drop.