Bank Negara: M'sia clearly on road to recovery
KUALA LUMPUR: The improvement in leading economic indicators globally and in Malaysia will likely mean the end of the “extraordinary environment” of loose monetary policy, which was among the measures taken by governments to boost their economies during the recession.
Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz told reporters yesterday following the launch of Thomson Reuters’ Islamic Finance Gateway that the country was clearly on the path of economic recovery.
“The indications are that if the economic performance in the fourth quarter (of 2009) was better than expected, then we’re no longer in extraordinary circumstances,” she said.
Several central banks have started to tighten monetary policy, with the Reserve Bank of Australia having raised its key policy rate three times last year while the US Federal Reserve raised the discount rate charged to banks for direct loans by 25 basis points to 0.75% last Friday amid rosier economic data and improved market conditions.
“Any adjustment in interest rates will be to achieve a normalisation and not a tightening,” Zeti said.
Bank Negara has left the interest rate at 2% since early last year but improvements in factory output as well as exports have fuelled speculation that the central bank would raise the key policy rate – the overnight policy rate – sooner than the commonly held view for second-half 2010 rate hikes.
A report by Standard Chartered Global Research puts the next rate hike as early as March 4, a week after the scheduled release of the fourth quarter’s gross domestic product (GDP) data this Thursday.
TA Securities Holdings Bhd economist Patricia Oh had said in an earlier StarBiz report that there could be a rate hike as early as May based on the stronger GDP numbers for the final quarter of 2009 and the expected improved numbers for the first quarter of 2010.
However, economists also believe that any “normalisation” of interest rates would come only if the central bank sees the recovery gaining momentum and to prevent any build-up in financial imbalances.
By FINTAN NG
fintan@thestar.com.my
Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz told reporters yesterday following the launch of Thomson Reuters’ Islamic Finance Gateway that the country was clearly on the path of economic recovery.“The indications are that if the economic performance in the fourth quarter (of 2009) was better than expected, then we’re no longer in extraordinary circumstances,” she said.
Several central banks have started to tighten monetary policy, with the Reserve Bank of Australia having raised its key policy rate three times last year while the US Federal Reserve raised the discount rate charged to banks for direct loans by 25 basis points to 0.75% last Friday amid rosier economic data and improved market conditions.
“Any adjustment in interest rates will be to achieve a normalisation and not a tightening,” Zeti said.
Bank Negara has left the interest rate at 2% since early last year but improvements in factory output as well as exports have fuelled speculation that the central bank would raise the key policy rate – the overnight policy rate – sooner than the commonly held view for second-half 2010 rate hikes.
A report by Standard Chartered Global Research puts the next rate hike as early as March 4, a week after the scheduled release of the fourth quarter’s gross domestic product (GDP) data this Thursday.
TA Securities Holdings Bhd economist Patricia Oh had said in an earlier StarBiz report that there could be a rate hike as early as May based on the stronger GDP numbers for the final quarter of 2009 and the expected improved numbers for the first quarter of 2010.
However, economists also believe that any “normalisation” of interest rates would come only if the central bank sees the recovery gaining momentum and to prevent any build-up in financial imbalances.
By FINTAN NG
fintan@thestar.com.my
Comments
Post a Comment