{"id":22474,"date":"2016-03-11T13:34:36","date_gmt":"2016-03-11T05:34:36","guid":{"rendered":"https:\/\/www.imoney.my\/articles\/?p=22474"},"modified":"2016-03-11T14:09:22","modified_gmt":"2016-03-11T06:09:22","slug":"bnm-keeps-rates-unchanged-at-zetis-last-policy-meeting","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/bnm-keeps-rates-unchanged-at-zetis-last-policy-meeting","title":{"rendered":"BNM Keeps Rates Unchanged At Zeti\u2019s Last Policy Meeting"},"content":{"rendered":"
Bank Negara, Malaysia\u2019s central bank, has kept all rates the same at the last policy meeting of governor Tan Sri Zeti Akhtar Aziz last Wednesday.<\/p>\n
The meeting was the last policy meeting of Zeti\u2019s 16-year tenure, and the key interest rate was maintained at 3.25%, as expected, and the reserve requirement ratio that was cut in January was also kept unchanged.<\/p>\n
\u201cOverall investment will continue to be supported by the implementation of infrastructure development projects and capital spending in the manufacturing and services sectors,\u201d BNM said in a statement.<\/p>\n
\u201cThe external sector is expected to record a modest improvement and provide additional support to the economy,\u201d the central bank added.<\/p>\n
In the same statement, BNM said that Malaysia will grow at a \u201cmore moderate pace\u201d this year, after last year’s 5% expansion.<\/p>\n
Domestic consumption will continue to support the economy, as external risks remain high as uncertainty in commodity prices and rising geopolitical risks continue.<\/p>\n
The statutory reserve requirement ratio (SRR) was unexpectedly cut in January from 4.0% to 3.5% to boost liquidity.<\/p>\n
According to a Singapore-based analyst at Nomura, Brian Tan, the decision last Wednesday \u201csupports the view that while growth is slowing, things are still under control\u201d.<\/p>\n
The outcome of the meeting was expected as all 11 economists in a Reuters poll had predicted that BNM would keep the overnight policy rate steady.<\/p>\n
BNM last revised the rate in July 2014, when it was raised by 25 basis points from 3.0% to curb rising household debt.<\/p>\n
After 16 years at the helm since 2000, Zeti will retire on April 30, and her successor has not been announced by the Government.<\/p>\n
The biggest concern, according to the analysts, is not the monetary policy but the succession at BNM.<\/p>\n
\u201cConcerns are growing that a political appointee could hurt the BNM\u2019s credibility and independence,\u201d said Chua Hak Bin, economist at Bank of America Merrill Lynch.<\/p>\n
Chua also said that the \u201cwidely tipped\u201d deputy governor Muhammad Ibrahim is the person Zeti sees as a capable successor.<\/p>\n
The credibility Zeti has lend to the central bank was crucial at a time when Prime Minister Najib Abdul Razak has faced urgings to resign over a financial scandal at state-owned 1MDB and deposits made into his personal bank account, said economists.<\/p>\n
Last year, the Tinggit was Asia\u2019s worst performing currency, losing 18.5% against the dollar. This year, the Ringgit has strengthened 4.0%.<\/p>\n
Inflation is also cautioned to be higher this year, said the central back, compared to 2015. The consumer price index increased 3.5% in January year-on-year, the biggest rise since March 2014.<\/p>\n