Jun 10 2015, 02:25 AM
QUOTE(Ramjade @ Jun 9 2015, 03:09 PM)
It looks like opr will drop. Affin t&c said that their rates will drop according to opr
It is every country central bank monetary policy to use the interest rate to expand or contract the money supply in the market. In general when there is too much money in the market and causing demand pull inflation, central bank willl increase the interest rate to reduce too much money in the economy to counter the inflation. Central bank will do the opposite of reducing interest rate when too little money in the market to encourage spending. Firms will invest in capital goods when cost of borrowing is low.With the GST impact, the inflation rate will go up eventually. And this will lead to cost push inflation. With depreciation of ringgit, cost of import of finished goods will be high but it will help our export provided that our raw materials or compoents are not imported from overseas. GST impact, inflation, exchange rate effects will determine will BNM move up or down the OPR. If market economy is contracting, BNM may continue with its OPR to monitor the market.
Proton first quarter sales was dropped by 50% and this and other leading indicators do reflect accurately Malaysia economy in the next 6 months, BNM most likely hold its OPR and may decrease OPR to stimulate local economy.
Externalwise, US economy is starting to recover with its QE policy and FED may start to raise the interest rate in the second half. This will make the money flowing into the US and BNM has to look into ways to minimize the outflow by raising the interest rate.
Another way, government can stmulate the economy is by increasing government spending on infrastrucure projects etc. To finance all these government spending, foreign debt will go up and worsen by weak RM. Thereby pushing further down the Malaysia economy.
if 1MDB issue is real, international credit rating on Malaysia will be bad and it will impact further the economy.
My opinion is BNM will hold its OPR and only response base on domestic and global economy. As usual, the prudent and slow approach. My guess is OPR may reduce if domestic economy is shrinking. The banks promotion rate is 4% per year will be countered by 3% inflation. The real interest is only 1%. The weak exchange rate will make the actual worth even smaller.
The best thing is not placing FD in the bank but may be invest in overseas property hoping for currency and capital gain. Nobody has the crystal ball to tell the future.
This post has been edited by gsc: Jun 10 2015, 02:34 AM
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