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That CUT is most probably coming to HELP

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In March, our Bank Negara Malaysia (BNM) reduced the Overnight Policy Rate (OPR) by 25 bps. The reason was because BNM expected the economy to be affected by COVID-19 in the first quarter. Thus, in order to help the growth in subsequent quarters, this cut is necessary. The industries such as tourism-related and manufacturing have been affected badly. BNM also said that the agriculture sector will also be weak in Q1 as well.

BNM said, “The reduction in the OPR is intended to provide a more accommodative monetary environment to support the projected improvement in economic growth amid price stability. The MPC will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation.”

Article in theedgemarkets.com . CGS-CIMB Securities Sdn Bhd said it expects Bank Negara Malaysia (BNM) to cut the overnight policy rate (OPR) by another 75 basis points (bps) in anticipation of a contraction in the country’s economy in 2020 and subdued inflation during the year. CGS-CIMB economists Michelle Chia and Lim Yee Ping wrote in a note that BNM’s monetary policy will become more accommodative. They predicted a cut of 50bps this May and another 25 bps in second half of 2020.

In the note: “We expect the sharp projected GDP contraction in 2020F (CGS-CIMB: – 4.3%) to keep Malaysia’s economy below potential for the next 12-18 months, resulting in an extended period of subdued inflation (CGS-CIMB: -1.1% in 2020F). Do read the full article here yeah. Article in theedgemarkets.com

Okay, for the potential property investors, the rates at this level would already be a very low one if we look historically. The below would be the interest rate in Malaysia from 2004 till today. The lowest point as we could see clearly was in 2010. 10 years ago. The highest was at 3.5% yeah.

Source: tradingeconomics.com

Unfortunately for the Fixed Depositors, the rates you will be getting will be coming down lower once your current deposit reaches maturity yeah. Happy understanding.

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