FW: CIMB Market Musings - Bank Negara Malaysia policy statement: Hints of Caution Amid Optimism

 

Bank Negara Statement

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• Bank Negara kept rates steady at 3.25% today, sounding positive on domestic factors but raising caution on recent financial market swings and prospects of trade friction.
• Though remaining on the hawkish side, the central bank actually toned down a tad its hawkish view from the monetary policy committee (MPC) statement released back in January 2018. Having already hiked by 25bps in January, there's less pressure to tighten policy.

Ringgit reaction

• There was little Ringgit reaction as the decision to keep rates steady was widely anticipated. Also markets are preoccupied by the prospects of trade wars and the resignation of Gary Cohn as Chief Economic Advisor.

Reaction in Malaysian bonds market

• Meanwhile, cognizant of the less hawkish MPC statement, there was interest on the bond side. The 10y MGS saw some flows (RM70m) after the release of the MPC statement (which was at 3.00pm). It's down to 3.98% from 4.01% around midday.

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