KUALA LUMPUR, Oct 30 — The door for further monetary easing remains open at the next Monetary Policy Committee’s (MPC) meeting on November 3, said Ambank Research.
Chief economist/head Dr Anthony Dass said a 25 basis points (bps) cut during the meeting with a high of 50bps from the current overnight policy rate (OPR) of 1.75 per cent would augur well for economic recovery.
He said following the 25 basis points (bps) cut to 1.75 per cent in July, BNM left the policy rate unchanged during the September MPC meeting, as the economic activity continued to recover from the trough in April, supported by the fiscal packages, monetary and financial measures.
“The question now is whether Bank Negara Malaysia (BNM) will hold or reduce the OPR in November.
“While there are some early signs of stabilisation from manufacturing, the virus spread containment measures will impact services,” he said in a note today.
Dass said there were also serious issues in areas like the job market, income reduction, post-moratorium impact, bankruptcies, non-performing loans, external headwinds and domestic non-economy.
“Johor, which accounts for 9.4 per cent of national gross domestic product (GDP) and 10.8 per cent of the country’s establishment of small and medium enterprises (SMEs), remains badly affected from the Singapore border closure,” he said.
The upcoming Budget 2021 that will be unveiled on November 6 plays a crucial role, Dass said.
“With the recovery being uneven across the sectors, the budget is expected to be big,
“The deficit is likely to be around between 5.5 per cent and 6.0 per cent of the GDP, which aims to continue supporting the economic recovery from the adverse impact of the pandemic,” he said.
Hence, the monetary policy will also need to play a crucial role, he added. — Bernama
