2016-07-13 07:00:00.59 GMT
By Chong Pooi Koon
(Bloomberg) -- Malaysia's central bank unexpectedly cut
interest rates for the first time in seven years, joining Asian
counterparts from Indonesia to Taiwan which have eased policy
this year to bolster their economies as global risks mount.
Bank Negara Malaysia lowered the overnight policy rate by
25 basis points to 3 percent, it said in a statement on
Wednesday in Kuala Lumpur. Reza Siregar of Goldman Sachs Group
Inc. was the only one of 18 economists surveyed by Bloomberg
News that predicted a reduction, with the rest expecting no
"They assess that the external risks have reverted much
higher," Julia Goh, an economist at United Overseas Bank Ltd. in
Kuala Lumpur, said before the decision. "Probably the domestic
sources of growth will not be sufficient to cushion the downside
risks from the external side."
Just two months into the job, Governor Muhammad Ibrahim is
facing increased pressure to lower borrowing costs to spur an
economy projected to expand at the slowest pace in seven years
amid falling oil revenue and weaker exports. The U.K.'s surprise
decision last month to leave the European Union has clouded the
global growth outlook, denting demand for Malaysian goods.
The central bank cut its inflation forecast for this year
to 2 percent to 3 percent from 2.5 percent to 3.5 percent.
Consumer prices rose 2 percent in May from a year ago.
The currency has strengthened 7.5 percent against the
dollar this year, the best performer in Asia after Japan's yen.
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