Bank Negara Malaysia will today release its interest rate decision. The Malaysian central bank is expected to slash interest rates
Bank Negara Malaysia will today release its interest rate decision.
The Malaysian central bank is expected to slash interest rates once again following its July decision to drop key rates to a historic low of 1.75%, in an effort to further stimulate Southeast Asia’s third-largest economy. The predicted revision to 1.5% would bring borrowing costs to even deeper lows, providing additional policy stimulus to an economy recently shaken by the discovery of a mutated strain of COVID-19.
The new strain, first detected in a Malaysian cluster of 45 cases, has forced the nation and its Southeast Asian neighbours to once again restrict their labour markets. Although Kuala Lumpur reported a slight Consumer Price Index (CPI) increase in July after a three-month decline, the nation’s recent decision to extend movement restrictions originally slated to end in August will force a continued closure of bars and nightclubs and prevent any foreseeable increases in consumer spending, constraining recovery in key sectors including domestic tourism and retail. Expect a second quarter contraction of 17.1% and plunging investment to push Banka Negara policymakers to cut rates once again, even at the expense of boosting the risk of rapid inflation.
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