KUALA LUMPUR: Malaysia's central bank is expected to cut key interest rates to historic lows on Wednesday, according to a Reuters poll, after surging coronavirus infections led the government to impose fresh lockdowns, further curbing economic activity.
Nine out of 15 economists expected Bank Negara Malaysia (BNM) to cut its overnight policy rate to a record low of 1.50%, according to the poll on Monday, with another analyst betting on a bigger 50 basis point cut.
The remaining five expected the central bank to stay put.
Malaysia's economy suffered its first recession since 2009 last year, as the COVID-19 pandemic hit businesses and exports. While the economy showed signs of rebounding in the third quarter as coronavirus curbs eased, analysts expected recent restrictions to deal a fresh blow to economic activity.
The government's current 2021 growth forecast of 6.5% to 7.5% "looks pretty much unattainable," said Mohd Afzanizam Abdul Rashid, chief economist at Bank Islam.
He said he had downgraded his own growth forecast for this year to 4% from 7.3% previously.
"Therefore, it warrants more policy support," said Afzanizam.
One day after the government imposed a two-week lockdown in six states with high coronavirus cases, Malaysia's king also declared a nationwide state of emergency on Tuesday to curb the spread of COVID-19.
Critics of Prime Minister Muhyiddin Yassin have said the emergency declaration was a move to retain control amid a power struggle.
In November, the government unveiled a record 322.5 billion ringgit ($79.75 billion) budget for 2021 to spur economic activity and support growth.
The government rolled out 305 billion ringgit worth of stimulus measures last year, ranging from cash handouts to wage subsidies and loan moratoriums to help the public and businesses weather the pandemic.
The government expects the economy to have contracted 4.5% last year. - Bernama
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