HALISTER1: Malaysia Central Bank Rate Cut Speculation Intensifying: DBS

Malaysia Central Bank Rate Cut Speculation Intensifying: DBS

(Bloomberg) -- Speculation of rate cuts by BNM intensifying, with fixed income market pricing in a rate cut within next 6 mos., DBS Bank analysts including Eugene Leow, fixed income strategist write in note today
  • MYR 3y-10y swap rates shifting lower by around 100 bps since late 2015 to levels comparable seen in 2013, before the taper tantrum
  • Decline in headline inflation to 1.1% in July probably exacerbated fall in swap rates
  • Combination of easing emerging market stress, rebound in oil prices and receding political noise also helped drive MYR interest rates lower
  • BNM holds policy meeting on Sept. 7 and is expected to keep benchmark rate unchanged at 3.0%, according to 13 of 16 economists in Bloomberg survey; 3 predict 25 bps rate cut to 2.75%
  • NOTE: Citigroup sys there’s risk for another BNM rate cut due to falling loan demand
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Eugene Leow (DBS Group Holdings Ltd)

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