KUALA LUMPUR, Malaysia – Of the midst of a lengthy statewide lockdown imposed to limit a surge in COVID-19 infections, Malaysia’s central bank is predicted to keep its main interest rate unchanged, according to a Reuters poll released on Tuesday. Bank Negara Malaysia (BNM) is expected to retain its overnight policy rate at 1.75 percent on Thursday, according to 12 of 13 analysts polled by Reuters. Last year, the central bank lowered its benchmark rate by 125 basis points.
“The current lockdown is expected to have an unequal impact on the economy,” Standard Chartered wrote in a note. “More targeted measures — rather than a policy-rate cut — may be more appropriate.”
Additional fiscal measures and stronger foreign demand, according to analysts, should provide greater support. Malaysia unveiled a US$36 billion aid package last week, which included a direct fiscal infusion of RM10 billion (US$2.41 billion), cash help, and subsidies. Due to tight coronavirus limits throughout the majority of the year, the country’s GDP shrank by 5.6 percent in 2020, its worst annual performance since the Asian financial crisis. Due to greater domestic expenditure and exports, it shrank 0.5 percent year over year in the first quarter of 2021, which was less than predicted.
Despite having a higher immunization rate than most of its neighbors, Malaysia has reported more than 785,000 cases of COVID-19, the third-highest in Southeast Asia after Indonesia and the Philippines.
In June, the administration imposed further curfews. While some states’ restrictions have now been eased, the number of infections in Malaysia’s capital, Kuala Lumpur, and adjacent areas has remained persistently high despite rigorous controls./n
