MNI STATE OF PLAY: Malaysia CB Looks To Rebound, Open Borders

Malaysia's central bank meets on Wednesday and policy makers will look for signs of economic recovery as domestic lockdown conditions ease with expectations that official interest rates will be held steady as the country moves toward opening international borders.

Bank Negara Malaysia cut its policy rate 125 basis points last year to the current level of 1.75%, with the last cut in July 2020, see: MNI STATE OF PLAY: Malaysia CENBANK Cautious On Econ Recovery.

With more than 70% of the population vaccinated and Malaysia's border set to open to international travelers next month, there is optimism that the economy is set to move past the pandemic period and policy support can be wound back.

SUPPORT

Malaysia's response to the pandemic has also included stimulus packages totaling USD128 billion.

Fiscal policy continues to be expansionary, with the government last week announcing a USD80 billion budget for 2022, a slight increase on this year. Bank Negara also last week announced a further USD1 billion in funding for small and medium sized enterprises through its Targeted Relief and Recovery Facility.

Supporting Malaysia's recovery is an export boom, with data last week showing exports were up 24.9% year on year to September with total trade also 25.5% higher.

This is helping support the ringgit, which has strengthened in recent weeks to around 4.15 to the USD.