Malaysia keeps interest rates steady, exports fall significantly
Back in July, the BNM had surprised economists who were expecting a stable stance and had cut the overnight policy rate by 25 points to 3% which was the first cut in seven years. BNM Governor Mohammad Ibrahim stated that it was a move to protect growth.
According to the BNM, despite the slowdown in growth to 4% recorded in the April-June period, the country had sufficient activities to support the economy. Plus, the economy was found to be performing as expected in 2016 and was expected to continue to follow a stable growth path in 2017.
Meanwhile, in July, Malaysia’s exports posted their biggest drop in 15 months. The drop exposed the ongoing pressure caused by an export-reliant economy and the necessity for monetary easing before the end of this year. Some analysts expect another rate cut could come up in November.
Exports to China declined 22.3% in July due to fewer electrical and electronic products, petroleum products and natural rubber shipments while exports to the USA increased by 4.1%.
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