BNM: Easing cycle over? – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assessed the latest interest rate decision by the Bank Negara Malaysia (BNM).

Key Quotes

“Bank Negara Malaysia (BNM) held the Overnight Policy Rate (OPR) unchanged at 1.75%... following cumulative -125bps cuts over four straight meetings since Jan…”

“BNM sounded more upbeat with highlights that the global economy continues to improve and Malaysia’s economic activity recovering from the trough in April. BNM expects the improvement to continue into 2021 though the pace of recovery will be uneven across sectors. The recovery will continue to be supported by the fiscal stimulus packages, monetary and liquidity measures, as well as the stimulus effect from the cumulative -125bps reduction in OPR between Jan-Jul.”

“BNM added that the current monetary policy stance is appropriate and accommodative. As such, we think this reflects a shift towards a neutral policy stance that implies no further rate cuts. Barring any negative surprises, we expect the OPR to stay at 1.75% at least until 1H21. The next monetary policy decision is due on 3 Nov, which marks the final meeting this year.”