Bank Negara and Interest Rates

[HIDDEN]

hi,

Did Bank Negara make any change to the interest rate? I think that they were due to meet on the 25th July.

If yes, have the banks changed their FD rates, and if another yes, what are they now.

regards, Scott

[HIDDEN]

No Scott, they didn't change it.

http://www.bnm.gov.my/index.php?ch=8&pg=14&ac=1664

.... Based on this assessment, the Monetary Policy Committee has decided to keep the Overnight Policy Rate unchanged at 3.50%.

regards

Stephan

[HIDDEN]

hi, Steph,

Many thanks for that.

regards, Scott

[HIDDEN]

Further interest rate cut seen

In Malaysia, another round of overnight policy rate (OPR) cut by Bank Negara is also looking more likely against this backdrop of global interest rate cuts amid a worsening economic outlook. Local economists are expecting the OPR cut next month to range between 50 and 75 basis points (bps) to 2.5% to 2.75%.
http://biz.thestar.com.my/news/story.asp?file=/2008/12/27/business/2882522&sec=business

[HIDDEN]

hi,

Today's Star had a short comment on interest rates.

In Malaysia, another round of overnight policy rate (OPR) cut by Bank Negara is also looking more likely against this backdrop of global interest rate cuts amid a worsening economic outlook. Local economists are expecting the OPR cut next month to range between 50 and 75 basis points (bps) to 2.5% to 2.75%.

FYI : The OPR was set at 3.5% in March 2005. Last month it was reduced to 3.25%. Inflation in October was 7.6%, and fell to 5.7% in November. The June high for petrol was RM2.70 per litre, and it's now RM1.80.

Currently a 12 month FD at Maybank earns 3.5%.

regards, Scott

[HIDDEN]

hi, Steph,

Many thanks for the post and the link. I've forgotten how to do links so I'll need a refresher course later today. I've moved your post to here, hope that you don't mind.

regards, Scott

[HIDDEN]

 Out of interest what is the current interest (borrowing) rate for domestic property?
Thanks

[HIDDEN]

hi,

As you know, the rates vary a bit between banks, vary as to the type of loan, and vary depending on length of mortgage. Length can go to 40 years.

A working average for a fixed rate would be between 4.8% to 5.8% for the first 3 or 5 years, and Base Lending Rate for the bank less, say, 2% for the remainder of the mortgage.

The BLR for each bank is slightly different but about 6.5%.

regards, Scott

[HIDDEN]

hi,

To bring this up-to-date :

KUALA LUMPUR, Feb 24 (Bernama) -- Bank Negara Malaysia today reduced the Overnight Policy Rate (OPR) by 50 basis points to two percent.

regards, Scott

[HIDDEN]

Hi Scott. Is OPR the same as Base Lending Rate (BLR)? If not do you know what the current BLR is?

Thanks

[HIDDEN]

hi,

The OPR (Overnight Policy Rate) was introduced in April 2004 by Bank Negara as a reference rate from which Malaysian banks can then set their own BLR's (Base Lending Rate). The idea was to introduce some competition between banks. The current range of BLR's is from 5.55 to 6.00.

There's a list of current (27 February 2009) BLR's at : http://www.meshio.com/base-lending-rate/

regards, Scott

[HIDDEN]

Thanks for that Scott....I guess it was a bit optimistic thinking BLR would be as low as 2%.
I still can't figure how banks can loose money if they pay max 3% to savers and charge borrowers BLR of around 5% + another half percentage point or so!!

[HIDDEN]

hi, FCS,

Yes, here in Singapore mortgage loans are from 3.5% (years 1 & 2) to about 4% thereafter. Yet a 12 month FD of S$500,000 will pay 0.8% pa.

You would have thought that even a monkey could make a profit on this basis. I guess the problem is that the monkeys at the banks are very cheeky.

regards, Scott

[HIDDEN]

hi,

The Bank Negara's annual report was published in most newspapers last week. The bits that caught my attention were :

1). Inflation peaked at 8.9% in August 2008.
2). Inflation for 2009 is predicted to average 2%.
3). Interest rates for 12-month FD's are predicted to remain at 2.5% for 2009.

regards, Scott

[HIDDEN]

hi,

Today Bank Negara announced no change in the overnight lending rate (the base rate). It will be kept at 2% which means that FD rates with the banks will remain unchanged.

Bloomberg also reported that in a poll of 19 economists it was expected that Bank Negara's 2% rate would be kept for most of 2010, with a possible rate increase to 2.5% at the end of 2010.

November 24, 2009 : Malaysia Keeps Benchmark Interest Rate at Record Low
"Malaysia’s central bank refrained from raising interest rates, keeping borrowing costs at a record low to support the country’s economic recovery.

Bank Negara Malaysia maintained its overnight policy rate at 2 percent for a sixth straight meeting, it said in a statement in Kuala Lumpur today. The decision was predicted by all 19 economists surveyed by Bloomberg News. The benchmark is at its lowest level since it was introduced in April 2004.

Malaysia’s consumer prices fell for a fifth straight month in October, giving the central bank room to keep interest rates low even as policy makers in Australia and India began withdrawing monetary stimulus to counter a revival in inflation. Bank Negara’s current policy stance is “appropriate” and will continue to support the economy, it said today.

“Continued deflation will allow Bank Negara to keep rates on prolonged hold far into 2010,” said Ashira Perera, an economist at Capital Economics Ltd. in London. “There is also still plenty of spare capacity in the economy, notwithstanding the recovery, so inflation is unlikely to develop into a problem any time soon.” "
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aB39naBr2kOo