Bank Negara Expected To Cut Interest Rate To 2 75 In July

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 CIMB Securities says the central bank will bypass the May meeting of its monetary policy committee, to give more time for assessing trade and growth data.
A research report by CIMB Securities said the move would allow the central bank to assess more data on external trade and the effects of the US tariffs which are suspended until July.KUALA LUMPUR: Bank Negara is forecast to cut its overnight policy rate by 25 basis points to 2.75% on July 9, bypassing its monetary policy committee (MPC) meeting this month
The forecast was by CIMB Securities, which said the move would allow the central bank to assess more data on external trade following tariffs announced by the US, as well as the gross domestic product announcement on May 16.
“Trade negotiations with the US are still ongoing. As the implications for Malaysia from de-escalation versus reciprocal tariffs are wide, reservation of judgment is warranted. The July MPC meeting will also mark the end of the 90-day pause of the US tariffs,” it said.
The bank also expects a more dovish tone and the MPC will explicitly acknowledge the downside risks that will weigh on the economy.
It noted Bank Negara currently projects gross exports to grow by 5.2% in 2025, down from 5.7% in 2024, while export growth averaged 4.4% up to March.
“However, recent indicators — including the latest manufacturing purchasing managers’ index — are showing further signs of weakness,” the firm said.
It added that the delay in the expansion of the sales and service tax and the planned rationalisation of RON95 fuel subsidies — which will affect a major portion of the population — are also expected to limit upward pressure on prices.
This supports the case for a monetary policy response, said CIMB Securities. - FMT

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