BNM likely to cut interest rate in next 3-6 months: Economist

KUALA LUMPUR (Aug 7): Bank Negara Malaysia (BNM) may cut its key interest rate in the next three to six months, partly because the world economy has worsened, following the escalating United States (US)-China trade dispute, said CIMB Group chief economist Dr Donald Hanna.

He said there was about a 60% chance of another rate cut, unfortunately, on the back of the likely increase in tariffs on Chinese products in September by the US, which was an external blow to an open economy like Malaysia.

The next three to six months would also depend on the US Federal Reserve's plan on its interest rate policy, and the impact of US tariffs on Chinese products, he said.

"Other Asian central banks will soon follow the policy direction of US interest rates movement," he told reporters, after the ASEAN+3 Regional Economic Outlook 2019 Roadshow here yesterday.

In May this year, BNM reduced the overnight policy rate to three per cent, from 3.25% previously — the first time it has cut the rate since July 2016.

Previously, US President Donald Trump had said he will impose a 10% tariff on another US$300 billion (US$1=RM4.18) of Chinese-made products, starting Sept 1, which would effectively put a tax on all Chinese goods coming into the US. 

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