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More monetary support may be needed in the opinion of analysts at Standard Chartered Bank as Malaysian GDP and inflation forecasts have been downgraded. USD/MYR is trading at 4.412.

Key quotes

“We lower our 2020 GDP growth forecast to 2.5% from 4.2% to reflect a greater hit to local and external demand from a more protracted outbreak.”

“Given the widening spread of the coronavirus outbreak, we expect Bank Negara Malaysia (BNM) to cut the overnight policy rate by 25bps each in May and July. This would bring the policy rate to 2%.”

“We lower our 2020 inflation forecast to 0.8% from 1.9% previously. For 2021, we revise our CPI inflation forecast to 2.5% on a modest recovery in global oil prices. At such levels, we believe the central bank can provide a very accommodative environment.”