Malaysia's central bank will keep rates unchanged until the middle of 2022

According to a Reuters poll of analysts, Malaysia's central bank will leave its main interest rate on hold on Wednesday to boost the economy as it gradually reopens amid a massive COVID-19 immunisation campaign.

Last year, as the pandemic spread, the central bank cut its benchmark rate by 125 basis points to help the economy.

Bank Negara Malaysia (BNM) is anticipated to retain its overnight policy rate at 1.75 percent this week, according to all 22 analysts polled between October 25 and 29.

The first raise, of 25 basis points, was expected to happen in the third quarter of next year, according to median predictions.
A slim majority of economists, 11 out of 20, predicted that rates would be at least that much higher by then.

"The main indicator to look for is whether the recovery is fully entrenched," said RHB Investment Bank senior economist Nazmi Idrus.
"If all goes well, they should be able to announce rate normalisation around the release of Q2 GDP in August or Q3 GDP in November next year."

The government is lifting restrictions and the economy is rebounding, with more than 70% of the population immunised and new infections declining significantly.

"The planned reopening of Malaysian borders to international travellers next month should provide a further boost," said Debalika Sarkar, an economist at ANZ.

"We also note that external trade is strong, bolstered by the sustained strength of the tech cycle and the boost to its terms of trade from strong commodity prices."

Last month, a Reuters poll forecast that the economy would drop by 1.3 percent in the previous quarter but grow by 4.0 percent in the current three-month period.
For 2021 and 2022, full-year growth forecasts were 4.0 percent and 5.9 percent, respectively.