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REFILE-POLL-After record cuts, Malaysia seen holding key rate

(Corrects garbled sentence in second paragraph)

* reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/cb-polls?RIC=MYINTR%3DECI poll data

* Slim majority of economists see no change to key rate

* OPR already at historic low after 125 bps of cuts this year

* Decision due at 0700 GMT on Tuesday, Nov 3

KUALA LUMPUR, Nov 2 (Reuters) - Malaysia’s central bank is seen holding its key rate steady on Tuesday, according to a slim majority in a Reuters poll, amid a fresh surge in coronavirus cases and political uncertainty tied to a challenge to Prime Minister Muhyiddin Yassin’s leadership.

Bank Negara Malaysia’s (BNM) last monetary policy committee meeting for the year also comes just days before Muhyiddin’s administration presents its first budget. Muhyiddin has said the the budget will focus on measures to counter the economic impact of the COVID-19 pandemic.

Nine out of 17 economists polled expect Bank Negara Malaysia (BNM) to keep its overnight policy rate at a record low of 1.75%, after having already delivered 125 basis points of rate cuts this year.

The remaining eight economists expect the central bank to cut the policy rate by 25 bps to a record low 1.50%.

Malaysia’s export-reliant economy has shown “visible” signs of recovery, as shipments rebounded by 4.4% in the third quarter after a 15.1% contraction in the April-June quarter, according to Bank Islam chief economist Mohd Afzanizam Abdul Rashid.

“Our sense is that the 3Q2020 GDP could come in at positive growth, albeit at a marginal pace. As such, there is less incentive or motivation by the BNM to cut the policy rate,” Mohd Afzanizam told Reuters.

But some analysts say the central bank could consider easing its key rate further in view of the surge of coronavirus cases in the past two months, which more than tripled the cumulative total to over 32,000 cases from before the start of a third wave in September.

A recent challenge for Muhyiddin’s post by opposition leader Anwar Ibrahim has “increased political noise”, adding to “downside risks to growth”, according to research note by Standard Chartered.

BNM, which is scheduled to announce the country’s third quarter growth performance on Nov. 13, had forecast the economy to contract 3.5-5.5% this year. Malaysia economy shrank 17.1% in the April-June period, its first contraction since the 2009 global financial crisis.

The government has so far announced 305 billion ringgit ($73.44 billion) worth of stimulus measures to help boost the country’s coronavirus-ravaged economy. ($1 = 4.1530 ringgit) (Reporting by Joseph Sipalan; Editing by Simon Cameron-Moore)