Malaysia: BNM kept rates unchanged – UOB

Bank Negara Malaysia (BNM) matched initial estimates and refrained from moving on rates at its meeting earlier in the week, noted Senior Economist at UOB Group Julia Goh and Economist Loke Siew Ting.

Key Takeaways

“As expected, Bank Negara Malaysia (BNM) kept the overnight policy rate (OPR) unchanged at 1.75% for the seventh straight meeting today (9 Sep). The Monetary Policy Committee (MPC) judged that the existing stance of monetary policy remains appropriate and accommodative as ongoing fiscal and financial measures will continue to mitigate the COVID-19 lockdown impact on the economy, despite lingering downside risks from both external and domestic front.” 

“The overall tone of the MPC statement was balanced. BNM acknowledged that the global economy continues to recover. However, there was caution on the emergence of COVID-19 variants of concern and the potential risks of heightened volatility as major economies embark on monetary policy normalisation. On the domestic economy, there was optimism that further easing of containment measures, vaccination progress, and higher global demand will support the recovery and growth into 2022.”  

“As such, we expect BNM to keep the policy rate unchanged until mid-2022. With 80% of adult population expected to be fully inoculated over the next two months (70.5% as at 8 Sep), we expect more sectors to reopen under new COVID-19 norms. This should support a pick-up in economic momentum by 4Q21. Budget 2022 that will be tabled on 29 Oct should also be expansionary and lift growth prospects in the coming year.”

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