, Malaysia

Malaysia's latest OPR cut needed to cushion COVID blow

The central bank slashed OPR to 2.5% amidst the virus’ global and domestic impacts.

Malaysia’s latest overnight policy rate (OPR) cut had largely been expected as a fiscal-monetary policy mix is needed to soften the impact of COVID-19, according to a Malaysia Rating Corporation Berhad (MARC) report.

The Bank Negara Malaysia (BNM) slashed the OPR by another 25bp to 2.5% during its monetary policy committee meet on 3 March, due to concerns over the domestic and global effect of the coronavirus. BNM said there is now “greater risk aversion, resulting in tighter financial conditions and higher volatility in the market,” adding that household spending and investment growth recovery are likely to be muted.

The rate cut complements the $4.79b (MYR20b) fiscal stimulus package announced February, with measures such as cash handouts and a $479m (MYR2b) SME relief, MARC said.

“Our estimates show that a 0.5 pp moderation in China’s GDP growth will likely reduce Malaysia’s GDP growth by 0.2pp. Meanwhile, Malaysia’s GDP growth could moderate by roughly 0.3pp, if as currently estimated by the IMF, world economic growth falls from 3.3% to 3.0%,” the report said.

The FTSE Bursa Malaysia KLCI rebounded slightly by 0.8% to 1,478.64 after the latest OPR cut. However, market sentiment remains weak despite the recent government stimulus measures lined up for this year.. The FBM KLCI had fallen by 8.2% from its peak of 1,611.38 back in early January.

Photo courtesy of Wikimedia Commons.

Join Asian Banking & Finance community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Event News

Event News

BDO Capital Named as PH’s Corporate and Investment Bank of the Year for 5 Consecutive Years Co-Written / Partner
BDO Capital & Investment Corporation (BDO Capital) has been recognized as the country’s Corporate and Investment Bank of the year for the 5th straight year at the Asian Banking & Finance Awards. BDO Capital’s remarkable achievement is a testament to its consistent excellence in delivering best-in-class investment banking services across various product lines in the Philippine capital markets.