Interest Rate in Malaysia
Malaysia - Interest Rate
BNM cuts policy rate in May for the first time since July 2016
The Monetary Policy Committee (MPC) of Bank Negara Malaysia reduced the overnight policy rate by 0.25 percentage points to 3.00% at its 7 May meeting, the first rate cut in nearly three years. Market analysts had been split on the decision, with many expecting rates to be left unchanged.
The decision to cut the overnight policy rate was mainly the result of tepid inflationary pressures and a moderate growth outlook. Although inflation returned in March following two months of annual price falls, it was still modest, while core inflation—which excludes certain types of fresh food and administered prices of goods and services—was limp. Moreover, the Bank expects inflation to remain low in the months ahead due to the price ceiling on domestic retail gasoline prices and changes to consumption tax policy. Overall, although average headline inflation should remain broadly unchanged from 2018, developments in global oil prices will largely determine the trajectory of inflation.
The Bank also highlighted downside risks to growth stemming from “heightened uncertainties in the global and domestic environment, trade tensions and extended weakness in commodity-related sectors”, and reduced the overnight policy rate in part to support the economy.
In its communiqué, BNM gave no explicit clue as to the future direction of monetary policy, although mild inflation likely rules out a rate hike in the near term.
Commenting on the future direction of the overnight policy rate, Prakash Sakpal, an economist at ING, noted:
“Today’s rate cut still leaves the central bank with a sufficient interest rate buffer if economic conditions deteriorate further, but this may not be required. Although the GDP slowdown intensified coming into 2019 – our estimate of 4.2% growth in the first quarter puts it below the BNM’s forecast range for the year. We expect the timely policy boost together with the favourable base effect to shore up growth in the rest of the year.”
The next monetary policy meeting is scheduled for 9 July.
Last month, Met the why particular panelists expected the overnight policy rate to end 2019 at 3.14% and 2020 at 3.15%. Given the Bank’s recent decision, these forecasts are likely to be revised down in the next Consensus Forecast, which is scheduled to be published on 21 May.
Malaysia - Interest Rate Data
|Policy Interest Rate (%)||3.00||3.25||3.25||3.00||3.00|
5 years of economic forecasts for more than 30 economic indicators.
Malaysia Interest Rate Chart
Source: Malaysia Central Bank.
|Bond Yield||3.81||0.15 %||May 13|
|Exchange Rate||4.16||0.0 %||May 13|
|Stock Market||1,601||-0.29 %||May 13|
Get a sample report showing our regional, country and commodities data and analysis.
Request a Trial
Start working with the reports used by the world’s major financial institutions, multinational enterprises & government agencies now. Click on the button below to get started.
May 11, 2019
Industrial production grew 3.1% year-on-year in March, up from February’s 1.7% growth and surpassing market analysts’ expectations of a 2.4% outturn.
May 7, 2019
The Monetary Policy Committee (MPC) of Bank Negara Malaysia reduced the overnight policy rate by 0.25 percentage points to 3.00% at its 7 May meeting, the first rate cut in nearly three years.
May 2, 2019
The manufacturing Purchasing Managers’ Index (PMI), which is produced by IHS Markit and Nikkei, ticked up to 49.4 in April from 47.2 in March.
April 24, 2019
Consumer prices rose 0.2% month-on-month in March, matching February’s figure and largely driven by higher transport prices. In year-on-year terms, consumer prices rose 0.2% in March, contrasting February’s 0.4% fall but slightly below market expectations.
April 11, 2019
Industrial production grew 1.7% year-on-year in February, down from January’s 3.2% growth and marking an eight-month low.