Malaysia slashes rates to fight virus impact

KUALA LUMPUR, Malaysia – Malaysia’s central bank on Tuesday, May 5, slashed interest rates to their lowest level since the 2009 global financial crisis as the coronavirus pandemic batters the economy.

The Southeast Asian nation has joined other countries around the world in easing monetary policy as the virus shutters businesses and confines people to their homes.

Bank Negara Malaysia slashed the rate by 50 basis points to 2%, as expected by economists, in its 3rd cut this year.

It came a day after the government allowed most businesses to reopen after a 6-week lockdown.

Malaysia’s outbreak has been small – it has recorded about 6,000 cases and 100 deaths – but the prime minister has said the curbs have so far cost the economy 63 billion ringgit ($14.6 billion).

“Global economic conditions have weakened significantly,” the bank said in a statement. 

“Widespread containment measures globally, international border closures, and the consequent weak external demand environment” will hit Malaysia’s economy, it added.

The government has announced stimulus measures worth billions of dollars to blunt the impact of the virus, including tax breaks and cash aid.

With uncertainty over how fast the global economy will recover from the pandemic, economists did not rule out further easing this year.

OCBC Bank economist Wellian Wiranto said that the central bank “might well cut further again if the pace of recovery…falters even after various lockdowns are lifted.” – Rappler.com