Bank Negara may slash interest rate again, says Standard Chartered

Pavither October 28, 2020

Standard Chartered Bank believes Bank Negara Malaysia (BNM) would once again slash the Overnight Policy Rate (OPR) by 25 basis points (bps) at this year’s last Monetary Policy Committee (MPC) meeting on 3 November, reported Bernama.

StanChart noted that the enforcement of the latest conditional movement control order (CMCO) may require renewed focus on growth support, given the sharp resurgence of COVID-19 infections in Malaysia.

The lower bound of the government’s gross domestic product growth forecast for this year – at -3.5% to -5.5% – may also be threatened by the latest extension of the CMCO to 9 November, it said.

Read this comprehensive guide on what is OPR. 

“This may provide an anchor for BNM’s decision on 3 November,” explained StanChart in a note.

While it may not boost investment activity, a lower interest rate may help reduce financing cost as well as provide more cash buffer for households.

It pointed to concerns over the stability of foreign exchange as another risk to its OPR forecast.

Considering the upcoming US election, StanChart said inflation and growth should be the chief considerations for monetary policy.

Overall, StanChart describes the decision to be a close one, saying it would depend on whether BNM wants to be pre-emptive.

“We think the recent sharp increase in infection rates onshore may require longer-than-expected restrictions to flatten the curve,” it said as quoted by Bernama.

“With the next BNM policy meeting likely to be only in January 2021, we expect the central bank to provide additional monetary support now rather than later.”

Currently, the OPR stands at 1.75% following the central bank’s decision to cut the key interest rate for four times in a row this year, kicking off with two 25 bps cuts during the January and March meetings. A 50 bps reduction was made in May and a 25 bps cut was again made in July.

 

Check out our helpful Guides to learn all about the various property buying, selling and renting tips!

POST COMMENT

You may also like these articles

Bank Negara Slashes OPR To 2%

Bank Negara Malaysia (BNM) has slashed its Overnight Policy Rate (OPR) by 50 basis points to 2%. It correspondingly reduced the floor and ceiling rates of the OPR corridor to 1.75% and 2.25%, respecti

Continue ReadingMay 6, 2020

OPR Cut Spillover Effect On Property Sector “Negligible”

With the Covid-19 disruption, slowing income trend and contraction in gross domestic product, CGS-CIMB Research does not expect the latest cut on the overnight policy rate (OPR) to have a significant

Continue ReadingMay 8, 2020

Economists See Another OPR Cut By Year-end

Some economists believe Bank Negara Malaysia (BNM) may cut the overnight policy rate (OPR) by 25 basis points before end-2020, as the fast-changing macroeconomic environment could encourage central ba

Continue ReadingSeptember 10, 2020

Feedback