Unexpected Central Bank Rate Cut in Malaysia

January 22, 2020

Bank Negara Malaysia became the third major central bank within a week to cut its key interest rate following moves last Thursday by the South African Reserve Bank and the Central Bank of the Republic of Turkey. BNM’s key interest rate was cut 25 basis points to 2.75%, its lowest level in almost nine years. The rate reduction was unexpected and follows a initial 25-bp cut engineered last May. In a released statement, officials depicted today’s easing as a “pre-emptive measure to secure the improving growth trajectory amid price stability.” Inflation last year averaged less than 1.0% in Malaysia, and downside growth risks remain such as “uncertainty from various trade negotiations, geopolitical risks, weaker-than-expected growth of major trade partners, heightened volatility in financial markets, and domestic factors that include weakness in commodity-related sectors and delays in the implementation of projects.”

Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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