It was a surprise for many when Bank Negara Malaysia (BNM) reduced the Overnight Policy Rate (OPR) recently. Article here: Yeah, lower mortgage rates, Oops, lower FD rates too It’s loved by many home buyers and yet it’s not a good news at all for those with lots of fixed deposits (FD in banks. While there are no immediate changes but as soon as the current FD term expires, then the next rate will be lower. The good news or the bad news is not ending yet. There are already expectations that BNM will have to decide for another cut in the OPR within 2020.
Article in theborneopost.com Kenanga Investment Bank Bhd (Kenanga Research) expects the central bank to lean towards another cut in 2020. It said, “For the time being, BNM has signalled a pause, stating that ‘at this current level of the OPR, the Monetary Policy Committee (MPC) considers the stance of monetary policy to be appropriate in sustaining economic growth with price stability.” It added, “However, we suspect the growing concerns of the spread of Coronavirus might have partly influenced and hasten BNM’s decision to cut this round.”
OCBC Bank’s Treasure Research felt that the current cut is insufficient to support the current official growth projection of 4.8% in 2020. It said, “We had highlighted before that the 4.8 per cent growth rate in 2020 that underpins the fiscal assumption was too optimistic, and we reckon growth is likely to be closer to 4.2 per cent that we expect.” Please do refer to the predictions and more details in the Article in theborneopost.com
If we look at these interventions as necessary in order to support the economic growth, then we should also have interventions with our investments too. Are we looking deeper into the stock market for more good buys? Lower valuations are becoming more common currently. Are we also casting our net wider when it comes to the property market? Truth is, there is now the possibility to buy a unit which could provide better yields currently versus say 3 years ago.
Remember also that BNM will react based on what they believe will be happening in the near future. If the growth slows, then the OPR cut will be sooner than later. Thus a rate cut cannot be considered a great news (for many people) but it will provide another window of opportunity for those who has yet to buy a unit. It does not have to be primary units too yeah. Secondary market has its advantages too. (Read here) Happy deciding.
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