KUALA LUMPUR: The 10-year Malaysian Government Securities (MGS) yield, which stands at an attractive level of 2.67% currently, gives ample room for Bank Negara to cut the overnight policy rate (OPR) by at least another 25 basis points (bps) by year-end, said RHB Asset Management Sdn Bhd (RHBAM).
While believing the current OPR of 1.75% is supportive of the nation’s growth, RHBAM fixed income chief investment officer Michael Chang said further rate cuts are very much contingent on the outlook of the Malaysian economy and the gross domestic product results for the second quarter of 2020, which is due for release on Aug 12.
“If the economic data is weak, the capacity for Bank Negara to impose further rate cuts exist, as the real rates for Malaysia is still positive at present, ” he told Bernama in an e-mail interview.— Bernama