Malaysian Central Bank Held Steady at 2.0%

November 24, 2009

Bank Negara’s key rate of 2.0% since last February 24th was declared to be still “appropriate” in a statement released after policymakers met.  From a peak of 3.5%, monetary officials only implemented three reductions in all, the aforementioned drop of 50 basis points last February and prior cuts of 75 bps in January 2009 and 25 bps exactly one year ago from now.  On-year CPI inflation remained negative in October but to a lessening extent. Indicators of expected inflation point to positive but contained inflation during 2010.  Industrial production and GDP are below year-earlier levels, but Malaysia’s domestic economy has shown improvement on a wide range of fronts including the labor market, production, trade, business and consumer sentiment, and corporate financing.  Bank Negara is not expected to be among the earliest wave of Asian central banks that engineer higher interest rates.  For now, the policy focus remains on promoting recovery.  Six dates in 2010 have been scheduled for monetary policy meetings: January 28, March 4, May 13, July 8, September 2 and November 12.

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


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