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Nikkei Markets

Malaysia central bank has more room to flex monetary muscle

Analysts say BNM could inject more cash, cut policy rate to combat COVID-19

Malaysia's central bank, Bank Negara Malaysia, has room to impose further monetary measures to protect the trade-reliant country from shocks related to the new coronavirus pandemic.   © Reuters

KUALA LUMPUR (Nikkei Markets) -- Malaysia's central bank has the firepower to inject more cash into the banking system to boost lending and support growth, with another policy rate cut not being ruled out as authorities in the trade-reliant country seek to cushion the economy against shocks related to the outbreak of the new coronavirus, economists said.

Bank Negara Malaysia's recent move to cut the so-called statutory reserve requirement ratio -- the proportion of deposits that banks have to set aside as cash -- will also help reduce funding costs and modestly raise interest income for banks, according to analysts.

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