ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintTitle ChevronIcon Twitter
Economy

Malaysia central bank holds key interest rate steady at record low

Recovery glimmers prompt decision to stand pat after four straight cuts

Malaysia's decision to shut down much of the economy for almost three months kept COVID-19 at bay but has taken a heavy toll.   © Reuters

KUALA LUMPUR (Reuters) -- Malaysia's central bank kept its key interest rate steady at a record low on Thursday, holding fire after four consecutive rate cuts this year, as the coronavirus-hit economy showed tentative signs of recovery.

Bank Negara Malaysia (BNM) left its overnight policy rate at 1.75%. Six out of 13 economists polled by Reuters had expected rates to remain unchanged, with a slim majority betting on a rate cut.

The central bank said labour market conditions, household spending and trade activity had continued to improve and that its monetary stance remained "appropriate" given the growth and inflation outlook.

But with the pace of recovery likely to be uneven across sectors, the central bank flagged some "downside risks and uncertainty" and said it would seek to secure a sustained rebound.

"The Bank remains committed to utilise its policy levers as appropriate to create enabling conditions for a sustainable economic recovery."

Malaysia's export-reliant economy saw its worst slump ever in the April-June period due to the fallout from the coronavirus pandemic, but has shown some signs of recovery, with a rebound in exports at the start of the third quarter.

The central bank has already delivered 125 bps of rate cuts this year while the government has also rolled out fiscal stimulus to help the economy throughout the pandemic.

Southeast Asia's third-largest economy shrank 17.1% in the second quarter, its first quarterly contraction since the 2009 global financial crisis, and BNM now expects the economy to slump 3.5%-5.5% in 2020.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more