BUSINESS

MANULIFE EXPECTS BNM TO CUT INTEREST RATE IN 'COMING QUARTER'

15/07/2021 05:54 PM

KUALA LUMPUR, July 15 -- Manulife Investment Management expects Bank Negara Malaysia (BNM) to cut interest rates “in the coming quarter” amid the worsening coronavirus pandemic in the country. 

“Despite the hit to near-term economic activity, fiscal space has become much more limited as government debt is now hitting the statutory debt limit of 60 per cent of gross domestic product (GDP), constraining the government’s ability to provide additional support measures,” it said in a research note today. “This leaves the responsibility of spurring economic recovery to BNM. We expect the central bank to announce an interest-rate cut in the coming quarter.”

The asset manager noted that the current ratio of infection per capita in Malaysia is the highest in Southeast Asia and people mobility is now the lowest in the region due to movement restrictions that began on June 1.

Assuming that COVID-19 case counts fall again and restrictions are eased, Manulife said Malaysia’s economy could resume its recovery in the second half of this year.

“The government is aiming to inoculate 30 per cent of the country’s population in high risk groups by late July,” it noted.

-- BERNAMA


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