central bank

 
 

BoE warns on further Brexit ‘cliff-edge uncertainties’

LONDON, March 21 — The Bank of England today expressed concerns that further “uncertainties” over a “cliff-edge” no-deal Brexit “could have a significant effect on spending” by businesses. The BoE decided to keep its main interest rate…


‘Local demand to cushion impact of pressure on exports’

KUALA LUMPUR: Malaysia’s domestic demand is expected to be able to cushion against challenges of moderate export growth, with an expected 4.4% gross domestic product (GDP) growth for 2019, according to the Institute of Chartered Accountants in England and Wales (ICAEW).

“Exports are expected to remain under pressure, with the increase in trade protectionism over the past year unlikely to change any time soon,” it said in its latest Economic Insight: Southeast Asia report.

Although domestic demand will likely provide some relief, ICAEW noted that there are pockets of concern with regard to investment growth.

“Private capital expenditure especially in machinery and equipment investment, has been on a downward trend in Malaysia in light of notably slower export growth.”

Going forward, ICAEW economic adviser and Oxford Economics lead Asia economist Sian Fenner said it expects the risks to the economic outlook of Malaysia to be primarily to the downside.

“A sharper slowdown in Chinese economic growth, triggered by worsening confidence or a renewed escalation in US-China trade tensions, both affect global trade and growth across the region. That said, we do not expect the external environment to be as worrisome as it was in 2015/16, as China’s growth is also expected to stabilise in Q2,” Fenner said in a statement.

For the Southeast Asian region, ICAEW said it started the year on a soft note as a result of the weakness in global economic activity late 2018, with Malaysia being the only country to record positive annual growth for exports in December 2018.

“Data indicates further weakness ahead in the manufacturing and export sectors as Malaysia’s aggregate Purchasing Managers’ Index slipped into contractionary territory.”

It also said domestic demand will likely provide some relief to the Southeast Asian markets, together with accommodative macro policies.

“Most central banks are likely to keep policy rates unchanged well into the second half of 2019 amid muted inflationary pressures. Expansionary fiscal policy will also help, with fiscal spending expected to be strong in Indonesia, Thailand and the Philippines ahead of upcoming elections in the first half of 2019.”

ICAEW regional director of Southeast Asia Mark Billington said although it expects domestic demand to remain resilient, the impact of increased trade tensions in the past year and slower Chinese import demand is likely to act as a drag on the region’s growth as a whole.

“The outlook for Asia trade may continue to face a challenging export environment,” said Billington.


Fed ditches plans for rate hikes this year

WASHINGTON: The US Federal Reserve on Wednesday brought its three-year drive to tighten monetary policy to an abrupt end, abandoning projections for any interest rate increases this year amid signs of an economic slowdown, and saying it would halt the steady decline of its balance sheet in September.

The measures, announced following the end of a two-day policy meeting, mean the Fed’s gradual and sometimes fitful efforts to return monetary policy to a more normal footing will stop well short of what was foreseen in late 2015 when the central bank first moved rates from the near-zero level adopted in response to the 2007-2009 financial crisis and recession.

Having downgraded their US growth, unemployment and inflation forecasts, policymakers said the Fed’s benchmark overnight interest rate, or fed funds rate, was likely to remain at the current level of between 2.25% and 2.50% at least through this year, a wholesale shift of their outlook.

Rates are now seen peaking at 2.6%, sometime in 2020, roughly a percentage point lower than the historic average for the fed funds rate and a sign that the US economy has entered a more sluggish era.

In contrast to projections through much of last year, Fed policymakers no longer see the need to move rates to a “restrictive” level as a guard against inflation, which remains lodged below the central bank’s 2% target.

They also said that as of May they would slow their monthly reduction of as much as US$50 billion (RM230 billion) in asset holdings, and halt them altogether in September, ending what amounted to a second lever of monetary tightening that had run in the background since late 2017.

When completed the Fed would still likely have at least US$3.5 trillion in bonds, more than four times the roughly US$800 billion it had heading into the crisis more than a decade ago. The Fed currently holds about US$3.8 trillion in bonds.

In terms of interest rates, the new Fed projections knocked the number of increases expected this year to zero from the two forecast in December, completing a pivot to a less aggressive policy in the face of an apparent jump in economic risks. At least nine of the Fed’s 17 policymakers reduced their outlook for the fed funds rate, a comparatively large number.

“It may be some time before the outlook for jobs and inflation calls clearly for a change in policy ,” Fed chairman Jerome Powell (pix) said in a press conference following the policy meeting, at which policymakers reaffirmed they will be “patient” before moving rates again.

“Patient means that we see no need to rush to judgment,” Powell said.


Norway hikes interest rate, bucking global trend

OSLO, March 21 — Norway’s central bank raised its key interest rate today and said it would continue to tighten its monetary policy due to the strength of the Scandinavian country’s economy, in contrast to a slowdown in much of the rest of the…


In post-coup election, Thai rice, rubber farmers rethink old divide

KHON KAEN/SONGKHLA (Thailand), March 21 — In the rice-growing heartland of Thailand’s northeast, Kamol Suanpanya, 80, meets in the off season with fellow farmers at a community centre, where they discuss Sunday’s election, the first after…


Dollar struggles, stocks up on dovish Fed but trade fears persist

HONG KONG, March 21 — The dollar struggled in Asia today after a surprisingly dovish Federal Reserve indicated it would not lift interest rates this year and sounded a note of caution on the economy. While the prospect of lower borrowing costs…


BNM’s monetary stance expected to tilt towards easing, Kenanga says

KUALA LUMPUR, March 21 — With the US Federal Reserve (US Fed) having signalled that there would be no interest rate hikes this year due to slower economic growth, Bank Negara Malaysia’s (BNM) monetary stance is expected to tilt towards easing,…


ICAEW: Malaysia’s GDP growth to moderate in 2019, forecast at 4.4%

KUALA LUMPUR: Malaysia’s gross domestic product (GDP) is expected to grow at 4.4% in 2019 on the back of domestic demand, amidst a difficult export environment, according to the Institute of Chartered Accountants in England and Wales’ (ICAEW) latest Economic Insight: South-East Asia report.

It said Malaysia’s domestic demand is expected to cushion against challenges of moderate export growth amid increased trade protectionism and slower Chinese import demand. Exports are expected to remain under pressure, with the increase in trade protectionism over the past year unlikely to change any time soon.

Economies in the South-East Asian region started the year on a soft note, as a result of the weakness in global economic activity late 2018. Malaysia was the only country to record positive annual growth for exports, as regional figures tumbled in December 2018; contracting 2.3% on the year following a weak outcome (2.2%) in November. Data indicates further weakness ahead in the manufacturing and export sectors as Malaysia’s aggregate Purchasing Managers’ Index slipped into contractionary territory.

Domestic demand will likely provide some relief, however there are pockets of concern, with regards to investment growth. Private capital expenditure especially in machinery and equipment investment, has been on a downward trend in Malaysia in light of notably slower export growth.

Residential investment will also expected to be held back by demand and supply imbalances but construction, particularly infrastructure investment, is expected to limit the downside to overall investment. Benign inflation conditions and rising real income growth will also continue to support household spending.

ICAEW economic advisor & Oxford Economics lead Asia economist Sian Fenner said looking ahead, it expects the risks to the economic outlook of Malaysia to be primarily to the downside.

“A sharper slowdown in Chinese economic growth, triggered by worsening confidence or a renewed escalation in US-China trade tensions, both affect global trade and growth across the region. That said, we do not expect the external environment to be as worrisome as it was in 2015/16, as China’s growth is also expected to stabilise in Q2,” Fenner said in a statement.

Looking at economies in South-East Asia, domestic demand will likely provide some relief, together with accommodative macro policies. Most central banks are likely to keep policy rates unchanged well into the second half of 2019 amid muted inflationary pressures. Expansionary fiscal policy will also help, with fiscal spending expected to be strong in Indonesia, Thailand and the Philippines ahead of upcoming elections in the first half of 2019.

ICAEW regional director of South-East Asia Mark Billington said although it expects domestic demand to remain resilient, the impact of increased trade tensions in the past year and slower Chinese import demand is likely to act as a drag on the region’s growth as a whole.

“The outlook for Asia trade may continue to face a challenging export environment,” said Billington.


China lifts yuan mid-point to highest in 8 months

SHANGHAI, March 21 — China’s central bank today lifted its official yuan midpoint to the strongest level in eight months at 6.6850 per dollar, to reflect losses in the greenback overnight after the Federal Reserve signalled an end to monetary…


Global shares tick up with Fed boost; oil hits four-month peak

NEW YORK, March 21 — Stocks across the world fought to extend their longest winning streak of the year yesterday, with a global index edging up as a boost from a dovish Federal Reserve more than offset concerns over US-China trade talks. In a…