July 11, 2024

Malaysia Policy Rate 3.0% (consensus 3.0%) in Jul-24

  • Bank Negara Malaysia maintained the OPR at 3.00%, aligning with the economic consensus amid a cautious approach to managing inflation and supporting economic growth.
  • Future interest rate policies will be influenced by global economic stability, the strength of the domestic tech upcycle, and the impact of domestic policy measures on subsidies and price controls.
  • Inflation is expected to rise moderately in the second half of 2024 due to subsidy rationalization. Still, overall pressures are mitigated by targeted measures to support businesses, with headline and core inflation projected to average between 2.0% - 3.5% and 2.0% - 3.0%, respectively.

July 11, 2024
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UK: GDP Fills In the H2 Hole

  • Another surprisingly strong GDP growth rate in May has extended output’s above-trend rise to the point where the H1 excess broadly matches the shortfall from H2 2023.
  • Returning to trend would require flat output through Q3, but other indicators suggest growth is only slowing, not stalling, so that may be too pessimistic.
  • Activity data do not signal policy as overly tight, although unemployment suggests it is a little tight. Nonetheless, rate cuts remain likely as policymakers look elsewhere.

By Philip Rush

July 11, 2024

Korea Policy Rate 3.5% (consensus 3.5%) in Jul-24

  • The Bank of Korea maintained the Policy Rate at 3.5%, consistent with the economic consensus, due to the need to confirm the continuation of slowing inflation trends and concerns over financial stability risks from exchange rate volatility and rising household debt.
  • Global economic conditions, including differentiated monetary policies among major economies, geopolitical risks, and fluctuations in financial markets, will significantly influence future monetary policy decisions.
  • Strong export performance and moderate growth are tempered by an uneven recovery in consumption and investment, alongside persistent financial stability concerns related to household debt and real estate project financing, guiding a cautious approach to future interest rate adjustments.

July 10, 2024

New Zealand Policy Rate 5.5% (consensus 5.5%) in Jul-24

  • The Reserve Bank of New Zealand's decision to maintain the OCR at 5.50% aligns with the economic consensus and reflects a continued commitment to restrictive monetary policy to control inflation.
  • Domestic inflation pressures, particularly in sectors less sensitive to interest rates, and global economic trends, including subdued growth among trading partners, will heavily influence future interest rate decisions.
  • Financial conditions and fiscal policy dynamics, including weak credit growth, rising funding costs, and the impact of government spending and tax cuts, will also help shape the RBNZ's monetary policy outlook.