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UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting reviewed the latest interest rate decision by the Bank Negara Malaysia (BNM).

Key Quotes

“Bank Negara Malaysia (BNM) kept the Overnight Policy Rate (OPR) unchanged at 1.75% today (3 Nov), as expected… This marks the second meeting that BNM kept rates unchanged following a cumulative 125bps cuts between Jan-Jul. The next MPC meeting is on 19-20 Jan, 2021.”

“BNM highlighted that latest indicators point to improved activity in 3Q20, albeit measures to contain the resurgence of COVID-19 infections have affected the recovery momentum in 4Q20. However, the 2020 GDP outlook remains within BNM’s earlier forecasted range of -3.5% to -5.5% that took such risks into consideration. Economic activity is expected to improve by 5.5%-8.0% in 2021.”

We expect OPR to remain at 1.75% through 2021. The cumulative 125bps reduction between Jan-Jul this year will continue to provide stimulus to the economy going into next year. We expect further fiscal support measures in the coming Budget 2021 (tabled on 6 Nov). BNM sees the current monetary stance as appropriate and accommodative. BNM underscored that they remain committed to use its policy levers as appropriate to support the recovery.”