Malaysia cuts key interest rate to record low to support economy

SINGAPORE (ICIS)–Malaysia’s central bank on Tuesday lowered its key interest rate by 25 basis points to a historic low of 1.75% to help accelerate the pace of the country’s economic recovery.

“For Malaysia, economic activity contracted sharply in the second quarter of the year, due to measures introduced to contain the pandemic globally and domestically,” Bank Negara Malaysia said in a statement.

Its first-quarter 2020 GDP growth slowed to 0.7% year on year. For the whole of 2019, the economy expanded by 4.3%.

Malaysia’s economic activities have begun to recover from the trough in the second quarter following the gradual and progressive re-opening of the economy since early May, but the pace and strength of the recovery remain subject to downside risks from both domestic and external factors, the central bank said.

“These include the prospect of further outbreaks of the pandemic leading to re-impositions of containment measures, more persistent weakness in labour market conditions, and a weaker-than-expected recovery in global growth,” Bank Negara said.

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