BNM again to cut key rate as pandemic persists?

KUALA LUMPUR 3 July - Bank Negara Malaysia (BNM) is expected to cut the interest rates, lowest in history by next week, based on the Reuters poll. 

The measure taken by Malaysia’s central bank is to protect the economy of this nation from the fallout of the Covid-19 pandemic.

BNM is predicted to cut its overnight policy rate MYINTR=ECI by at least 25 basis points (bps) to 1.75%, according to seven out of the 12 economists polled, with two of them betting on a bigger 50 bps rate reduction.

According to Reuters, the five economists forecasted the interest rates to stay at 2% which is already at record low after it was three consecutive rate reductions this year.

Asia economist for Capital Economics, Alex Holmes believes there would be a bigger move in the upcoming meeting.

“Given the poor outlook for growth and deeply negative inflation, we suspect the BNM will make use of its policy space and opt for a 50bp cut,” he said as quoted in Reuters.

Back in May, Malaysia reopened some economical sectors after growing just 0.7% in the first quarter amid movement control order (MCO) due to pandemic outbreak.

Malaysia’s exports fell 25.5% in May, its biggest drop in 11 years.

In dire need to recovery, Malaysia’s government since March rolled out a 260 billion ringgit ($60.69 billion) stimulus package to offset a sharp slowdown in domestic economic activity, and steep declines in tourism and demand for its commodities such as palm oil, crude oil and natural gas. - DagangNews.com