Malaysia Cuts Rate by 25 Basis Points to Aid Growth

Malaysia

Malaysia’s central bank cuts interest rates to strengthen the economy as global risks weigh on growth.

Bank Negara Malaysia reduced its overnight policy rate by 25 basis points to 3 percent from 3.25 percent for the first time since 2009, according to a statement released by the apex bank on Wednesday.

“They assess that the external risks have reverted much higher,” Julia Goh, an economist at United Overseas Bank Ltd. in Kuala Lumpur, said before the decision. “Probably the domestic sources of growth will not be sufficient to cushion the downside risks from the external side.”

The Governor of the central bank Muhammad Ibrahim is under increasing pressure to lower borrowing costs to support an economy forecast to expand at the slowest pace in seven years, after fall in oil prices reduced both its revenue and exports.

The governor who came to office two months ago said domestic demand has been aiding the economy, while admitting household consumption needs increase in income and new job creation, amid other measures to be implemented by the government to support the economy.

He also warned that the slow global growth and uncertainties could weigh on Malaysia’s progress.

The nation’s 2016 inflation forecast was lowered from 2.5 – 3.5 percent to 2 – 3 percent and predicted stable in 2017.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

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