KUALA LUMPUR,Jan 20: Malaysia kept its benchmark interest rate unchanged today, saving its policy ammunition as the country grapples with a surge in Covid infections that could take months to subside.
Bank Negara Malaysia (BNM) maintained the overnight policy rate (OPR) at a record-low 1.75% at its first meeting of the year, as expected by 12 of 23 economists surveyed by Bloomberg. The rest had forecast a 25-basis point cut.
The decision comes as the government imposed new lockdowns across nearly the entire country. The restrictions, put in place after infections pushed the health system to the breaking point, were intended to last two weeks but may be extended, the government said.
Analysts have shaved as much as 1.5 percentage points from their 2021 gross domestic product (GDP) forecasts because of the curbs.
While less severe than the two-month lockdown enacted last March, the restrictions will mean a loss of about RM3 billion per week in private consumption, according to an RHB Bank estimate.
Earlier this week the government unveiled a RM15 billion aid package to help people and businesses weather the restrictions.
The announcement is mainly a “re-packaging” of budget measures and extension of last year’s economic stimulus measures, Maybank said in a note Tuesday, maintaining its growth forecast of 5.1% for this year.