Bank Negara Malaysia Cuts Overnight Target Rate by Another 50 Basis Points

February 24, 2009

Malaysia’s central bank cut its target rate to 2.0% from 2.5% and halved reserve requirements to 1%.  Two earlier rate reductions in the past three months amounted to 75 basis points on January 21st and 25 bps last November 24th.  Officials spoke of rapidly deteriorating trade, production and investment on a global and regional scale as well as in Malaysia, where the possibility is mounting of negative calendar 2009 growth.  Dysfunctional world financial markets persist, and the impact of stimulus packages has not yet been felt.  Inflation is falling, and further monetary measures will be undertaken as needed.

The statement closes on a positive note, expressing confidence in eventually returning to a satisfactory Malaysian economic performance, because the economy is not over-leveraged, the financial system remains sound, and the underlying balance of payments is healthy.

Copyright 2009 Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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