Interest rates are a key determinant on whether or not the property market is vibrant. Imagine a 14% interest rate and suddenly, everyone lost all appetite to buy a property. Today, Bank Negara Malaysia (BNM) has decided to retain the overnight policy rate (OPR) in its monthly meeting. What happened last month was that BNM reduced the OPR by 25 basis points. So, is reducing it considered good or bad?
Here’s the earlier article: BNM raised OPR, good or bad? From the comments and signs, I think the market likes this decision. Briefly, when the market is weakening, the rates may be lowered. This is called an accommodative stance. When market is strengthening too fast due to consumption, rates are raised to lower speculative activities. So, what did maintaining rates do the share market today?
Article in thesundaily.my Bursa Malaysia closed firmer at its intra-day high. Investor’s confidence improved because of Bank Negara Malaysia’s (BNM) decision to retain the overnight policy rate (OPR). FTSE Bursa Malaysia KLCI was moving between 1677.98 to 1,682.87 throughout the day and it closed at 1,682.87. MIDF Amanah Investment Bank Bhd said BNM held the OPR at 3% amid low inflationary pressure and stable labour market. It also said that it expected a better outlook for the second quarter (Q2) and the second half of 2019. It said, “Steady economic performances of the world’s two largest economies, on top of the ringgit depreciation, are expected to provide support to Malaysia’s export performance.” Article in thesundaily.my
For property owners, this should still be a good news. Rates were not raised. As for that potential of rates being lowered further due to a slowing down economy, I think everything will depend on the economic growth and external environment. As long as the U.S. and Chinas trade war does not escalate, I think the world will heave a sign of relief. As many report has pointed out, in the trade war, Malaysia is considered a winner because some of the factories from China could be relocated here to mitigate potential future risks from the U.S. policy. However, lets not be too happy about this because Malaysia is also in the same classification with China by the U.S. on currency manipulation.Heres that earlier article: Malaysia and China in the same list of countries with potential currency manipulation Happy viewing.
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