MALAYSIA REDUCES KEY INTEREST RATE, FIRST TIME IN FIVE YEARS
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BY OWOLABI OLUWADARA
Malaysia’s central bank on Wednesday lowered its interest rate by 25 basis points, marking its initial reduction in five years, as a “preemptive action” to support growth amid subdued inflation.
Bank Negara Malaysia set its benchmark overnight policy rate (OPR) to 2.75 per cent, down from 3.0 per cent.
“The decrease in the OPR is, consequently, a proactive strategy intended to maintain Malaysia’s consistent growth trajectory in light of moderate inflation expectations,” the central bank stated in a release.
“This outlook is weighed down by uncertainties surrounding tariff developments, as well as geopolitical tensions,” it said, adding that such uncertainties could lead to “greater volatility in the global financial markets and commodity prices”.
The upper and lower limits of the OPR corridor were consequently diminished to 3.0 percent and 2.5 percent, respectively, it stated.
The lowered rate came a day after US President Donald Trump increased threatened tariffs on Malaysia from 24 per cent to 25 per cent.
Malaysia’s Prime Minister Anwar Ibrahim warned in May that the nation was improbable to reach its economic growth forecast of 4.5 percent to 5.5 percent.
Anwar criticized earlier on Wednesday trade tariffs, as regional foreign ministers convened in Kuala Lumpur for a three-day assembly, which also encompasses discussions with the United States, China, and Russia.
Trump’s latest tariff moves will be high on the agenda at the meeting of top diplomats of the Association of Southeast Asian Nations (ASEAN) in the Malaysian capital, ending on Friday
Malaysia is this year’s rotating chair of the 10-member ASEAN.
The country’s trade minister, Zafrul Aziz, stated at a media briefing that ASEAN nations would proceed with bilateral discussions with Washington prior to the August 1 tariffs deadline.
Zafrul said they remained “optimistic” that a deal could still be reached.
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