Free Trial

MNI STATE OF PLAY: Malaysia CENBANK Cautious On Econ Recovery

MNI (Sydney)
SYDNEY (MNI)

Malaysia's central bank has left official rates on hold and kept its powder dry in case more monetary stimulus is needed if the economic recovery fails to gather momentum.

As expected on Thursday, Bank Negara Malaysia kept its Overnight Policy Rate (OPR) steady at 1.75% for the seventh consecutive meeting, citing the ongoing relaxation of lockdown conditions. But the central bank said it was prepared to take more action if necessary.

"Moving forward the further easing of containment measures, rapid progress of the domestic vaccination program and continued expansion in global demand will support the growth momentum going into 2022," a BNM statement said.

RISKS HIGHLIGHTED TOO

"Risks to the growth outlook, however, remain tilted to the downside due to external and domestic factors," BNM said.

These include delays in easing pandemic containment measures and a "weaker than expected global growth recovery."

BNM has recently cut its growth forecasts to between 3% and 4% for 2021, well down on previous forecasts.

INFLATION IN CHECK

Helping the central bank's decision is a subdued outlook for inflation, with core inflation averaging between 0.5% and 1.5% this year.

BNM said it considered the monetary policy stance to be "appropriate and accommodative" and current settings would act in combination with fiscal and financial measures to "cushion" the impact of the pandemic.

A new six-month loan repayment moratorium was announced earlier in July and an estimated one million small and medium sized businesses are expected to benefit from cash payments under the US$35 billion Pemulih stimulus package.

As a result of this spending government debt is expected to move very close to the limit of 60% of GDP set last year, although there have been calls in recent days to raise this to 65%.

MNI Sydney Bureau | +61-405-322-399 | lachlan.colquhoun.ext@marketnews.com
MNI Sydney Bureau | +61-405-322-399 | lachlan.colquhoun.ext@marketnews.com

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.