Singapore employers more cautious in hiring, as job vacancies in Q2 2019 continue to decline, says report

SINGAPORE, Sept 14 — In light of economic headwinds, hiring sentiments continued to be cautious for the second quarter of this year. The number of job vacancies offered on the market continued to decline from the previous quarter, as the resident…

Bursa Malaysia likely to edge higher to 1,620 next week

KUALA LUMPUR, Sept 14 — Bursa Malaysia is expected to edge higher towards the 1,620 level next week, driven by positive domestic economic performance and Wall Street sentiment, renewed optimism over the breakthrough in the US-China trade war talks…

If markets stay calm, BOJ may hold fire despite ECB’s loosening

TOKYO: Stable markets and resilient domestic demand could help the Bank of Japan withstand pressure to expand an already massive stimulus programme when policymakers meet next week in the wake of the European Central Bank’s monetary loosening.

Increasing signs of slowing global demand have made Japanese central bankers less confident about an early pickup in global growth, making them more open to debate over easing policy.

Running short of ammunition to ease further, BOJ policymakers, however, want to keep their powder dry for as long as possible in case Japan’s economy runs into greater trouble.

With markets calm for now, the BOJ is leaning towards keeping interest rates unchanged at the Sept. 18-19 meeting unless the U.S. Federal Reserve’s decision – to be announced hours before the BOJ’s – jolt markets and trigger an unwelcome yen spike.

“The yen is weakening and stock prices are rising. Market conditions aren’t worsening enough for the BOJ to ease now,” said Mari Iwashita, chief market economist at Daiwa Securities.

But with global uncertainties heightening and the fallout from the bitter trade war broadening, it may be only a matter of time before the BOJ ramps up stimulus, analysts say.

An increasing number of economists polled by Reuters expect the BOJ to loosen policy further this year, with well over a third of them betting it could act next week.

“When there’s so much uncertainty, additional easing could be required any time,” a source familiar with the BOJ’s thinking said, a view echoed by two other sources.

Under the policy, dubbed yield curve control (YCC), the BOJ guides short-term rates towards -0.1% and the 10-year government bond yield to around 0%. It also buys government bonds and risky assets in a bid to achieve its elusive 2% inflation target.

Deepening negative rates will be the key option if the BOJ were to ease, although the central bank may accompany that with measures to mitigate the pain on financial institutions, sources have told Reuters.

Even if the BOJ decides to hold fire next week, Governor Haruhiko Kuroda will likely stress the bank’s readiness to ease swiftly to fend off shocks to the economy, analysts said.

“The ECB and the Fed are in deep easing mode. To prevent the yen from rising, the BOJ needs to keep alive market expectations that it, too, will ramp up stimulus fairly soon,” said Masaaki Kanno, chief economist at Sony Financial Holdings.


Market expectations of imminent easing grew after the BOJ pledged in July to act pre-emptively “without hesitation” against risks that could knock the economy off the path toward achieving its 2% inflation target.

Waiting until the subsequent meeting on Oct. 30-31 will allow BOJ policymakers time to scrutinise the bank’s “tankan” business sentiment survey for clues on how much the pain Japan is suffering from the U.S.-China trade war. Policymakers can also see the initial consumer reaction to a sales tax hike that kicks off in October.

The BoJ is under no political pressure for imminent action.

Japanese Finance Minister Taro Aso said on Friday it was up to the BOJ to make monetary policy decisions, adding that Japan’s economic fundamentals remained solid.

Another problem the BOJ board could discuss next week is the persistent decline in long-term rates that threaten the bank’s policy aimed at controlling the yield curve.

The YCC policy was introduced partly to prevent the yield curve from flattening too much, as excessive declines in long- and super long yields will erode profit margins of financial institutions.

But downward pressure on global long-term rates pushed Japan’s 10-year yield to -0.295% last month, well below the -0.2% level seen by markets as the BOJ’s line in the sand. The 20-year yield briefly hit to 0.015%, barely staying above zero.

Sources have told Reuters the BOJ likely won’t tolerate the 10-year yield from sliding below -0.3%, as that could push the 20-year yield below zero and flatten the yield curve.

The BOJ may eventually need to coordinate with the Ministry of Finance, which issues public debt, to control the supply of bonds to steepen the yield curve, Daiwa’s Iwashita said.

“The BOJ may keep trying to prevent super-long yields from falling by reducing bond buying. But there’s a limit to what it can do alone,” she said. – Reuters

Alibaba to host second Malaysia Week to promote local products

KUALA LUMPUR, Sept 13 — Alibaba Group, in cooperation with the Malaysia Digital Economy Corporation (MDEC), is hosting the second Malaysia Week to promote all things Malaysian to consumers across China. In a statement today, the group said…

Draghi ties Lagarde’s hands with promise of indefinite stimulus

FRANKFURT, Sept 13 — European Central Bank chief Mario Draghi pledged indefinite stimulus yesterday to revive an ailing euro zone economy, tying the hands of his successor for years to come and sparking an immediate conflict with US President…

ECB cuts key rate, to restart bond purchases

FRANKFURT, Sept 12 — The European Central Bank approved a fresh stimulus package as expected today, cutting interest rates and approving a new round of bond purchases to prop up euro zone growth and halt a worrisome drop in inflation expectations….

Profit-taking, bearish regional markets drag Bursa Malaysia down

KUALA LUMPUR, Sept 12 — Bursa Malaysia ended at its intraday low today, partly on profit-taking amid bearish trend among the major South-east Asian equity markets. At 5pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) lost 1.3 points to 1,601.0 after…

Analysts: Stronger Q2 backs BNM’s decision to retain OPR

KUALA LUMPUR, Sept 12 — Economists believe Bank Negara Malaysia’s decision to maintain the overnight policy rate (OPR) at 3.00 per cent today is on the back of the stronger gross domestic product (GDP) recorded in the second quarter (Q2) this…

Bank Negara keeps overnight rate at 3pc

KUALA LUMPUR, Sept 12 — Bank Negara Malaysia (BNM) has maintained the overnight policy rate (OPR) at 3 per cent at its Monetary Policy Committee (MPC) meeting today. In a statement, BNM said the global economy is expanding at a more modest pace…

BNM keeps key interest rate at 3%, warns of downside risks from trade spat

PETALING JAYA: As expected, Bank Negara Malaysia has decided to maintain the Overnight Policy Rate (OPR) at 3% at its Monetary Policy Committee (MPC) meeting today.

The central bank said in a statement that the MPC will continue to assess the balance of risks to domestic growth and inflation, to ensure that the monetary policy stance remains conducive to sustainable growth amid price stability.

“At the current level of the OPR, the stance of monetary policy remains accommodative and supportive of economic activity.”

While the 2019 growth forecast of 4.3% to 4.8% for the Malaysian economy remains unchanged, BNM said it is subject to further downside risks from worsening trade tensions, uncertainties in the global and domestic environment, and extended weakness in commodity-related sectors.

However, it noted that Malaysia’s diversified exports will partly mitigate the impact of softening global demand.

BNM also cautioned that the recent escalation of trade tensions points to weaker global trade going forward, with increasing signs of spillovers to domestic economic activity in a number of countries.

“Monetary policy easing in several major economies has eased global financial conditions, but uncertainty from the prolonged trade disputes and geopolitical developments could lead to excessive financial market volatility.”