Malaysia: Surprisingly Large Rate Cut Signals Deep Economic Concerns?

Bank Negara surprised market with a large 75bps cut to its Overnight Policy Rate (OPR) at its scheduled meeting on Wed (Jan 21) while market was just expecting a 25bps easing. This brings the OPR to 2.50%, the lowest since the central bank started to target the rate in April 2004. The Statutory Reserve Requirement (SRR) was also reduced from 3.50% to 2.00% with effect from Feb 1. The aggressive moves following the 25bps rate cut in November suggests concerns over the rapid deterioration in the incoming economic data and reassures investors that the BNM is ready to take more aggressive steps if necessary.

extracted from UOB Econommic Treasury Research