Malaysia’s monetary policy committee meets today in Kuala Lumpur. The country’s central bank is expected to cut interest rates to
Malaysia’s monetary policy committee meets today in Kuala Lumpur.
The country’s central bank is expected to cut interest rates to a historic low as it seeks to protect Southeast Asia’s third-largest economy from the fallout of the COVID-19 pandemic. The Bank Negara Malaysia (BNM) is anticipated to slash its overnight policy rate from 2.00% to 1.75%.
The move comes as the country faces sobering economic data indicative of a larger economic crisis. The economy grew only 0.7% in the first quarter while exports fell over 25% in May, the country’s most precipitous drop in over a decade. Moreover, despite over $68 billion in stimulus packages thus far, Malaysia has recorded three straight months of reduced consumption—the consumer price index down 2.9% in May from a year prior.
While Malaysia’s economy is showing early signs of recovery, especially in manufacturing and the stock market, an anticipated decline in exports to the US as American COVID-19 cases spike as well as a potential renewal of US-China trade tensions continue to pose a threat to the recovery. Expect these considerations to weigh heavily on BNM policymakers as they likely err on the side of caution and agree to a rate cut.
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