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MNI BNM Preview - July 2021: On Hold Despite Virus Headwinds

Executive Summary

  • Malaysia has implemented lockdown restrictions across the country and outlined a roadmap for easing restrictions, conditional on a set of virus-related criteria. The federal government has subsequently shifted to a more targeted approach, whereby individual states can proceed with reopening whenever they meet predefined thresholds.
  • The government has also unveiled a sizeable stimulus package intended to soften the impact of restrictions, while also ramping up the pace of its vaccination drive.
  • Consumer-price inflation unexpectedly eased a tad in May, but still remains elevated, which may help discourage the central bank from adding monetary stimulus.
  • Bank Negara Malaysia will likely look through the current Covid-19 dynamics and leave the OPR unchanged at its record low, while waiting for fiscal measures and vaccines to support economic recovery.

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