Bank Negara expected to slash OPR to 2 pct - report

CORONAVIRUS | Bank Negara Malaysia is expected to cut its overnight policy rate (OPR) to two percent today, the lowest in a decade.

According to a Bloomberg survey, the central bank will reduce the OPR by up to 50 basis points (50 bps) to help cushion the economy in the wake of the coronavirus pandemic.

This comes as Malaysia announced the reopening of most businesses and trade under a conditional movement control order (MCO), which came into effect yesterday.

“The central bank will lower the overnight policy rate to two percent, the lowest level since 2010, from 2.5 percent, according to 14 of 20 economists surveyed by Bloomberg.

“That would be the third reduction in a row and the biggest in more than a decade. Five analysts see a 25 basis-point easing and one predicts no change,” the report said.

According to The Edge Markets yesterday, Standard Chartered further expected Bank Negara to slash interest rate by a further 25 bps in July.

The national bank had earlier this month stated it expected a gradual improvement of the country’s economic growth for the second half of the year, boosted by the OPR and the continuation of large-scale infrastructure projects such as Mass Rapid Transit 2 (MRT2), Light Rail Transit 3 (LRT3) construction.

Bank Negara governor Nor Shamsiah Mohd Yunus stated, however, said economic growth is likely to remain challenging throughout the world for the rest of the year.

Malaysia is looking to revitalise its fiscal state after the economy was largely stagnated due to resulting movement and business restrictions placed by the government to contain the Covid-19 outbreak, which has killed 105 in the country to date.

In March and April, the new Perikatan Nasional government announced several stimulus packages amounting to RM260 billion to help small and medium enterprises, citizens and others deal with the economic ramifications of the pandemic.

This included the RM20 billion stimulus package announced by former prime minister Dr Mahathir Mohamad in February. - Mkini