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The Bank Negara Malaysia (BNM) is seen reducing its key interest rate in Q1 2021 in opinion of Senior Economist Julia Goh and Economist Loke Siew Ting at UOB Group.

Key Quotes

“Bank Negara Malaysia (BNM) expects headline inflation to average higher in 2021 mainly due to global oil prices. However, underlying inflation is expected to remain subdued amid continued spare capacity in the economy. As such, we think that BNM may consider easing interest rates further should the pandemic situation necessitate an extension of the tighter containment measures which lends to further downside risks to economic growth. The growth outlook remains clouded by uncertainties of the pandemic and potential challenges in roll-out of vaccines globally and domestically. Hence, we keep our view for a 25bps rate cut to a new low of 1.50% in 1Q21.”