Heteronomics Archive

March 06, 2025

Malaysia: Policy Rate Held At 3.0% (Consensus 3.0%) in Mar-25

Despite global uncertainties, Bank Negara Malaysia maintained the policy rate at 3%, citing sustained economic resilience, robust domestic demand, and investment activity. The 5.1% GDP growth in 2024 supports the decision, although external risks remain.
Inflationary pressures remain contained, with headline inflation at 1.7% in early 2025, supported by easing global cost conditions and lower commodity prices. However, upside risks persist from domestic policy spillovers and external factors, including financial market volatility and trade policy shifts.
The ringgit remains influenced by external factors, with narrowing interest rate differentials providing support amid global uncertainty. The MPC’s data-dependent approach ensures monetary policy remains conducive to growth while preserving price stability.

February 27, 2025

The ECB emphasised a cautious and data-dependent approach in the account of its January rate cut decision. Market expectations were noted to price in a slower rate-cutting cycle, with the end-2025 rate projected at 2.08%.
While inflation continues to decline, services inflation remains elevated due to persistent wage growth. The ECB expects wage pressures to moderate, but upside risks, including geopolitical uncertainty and trade disruptions, could delay further easing.
Some Governing Council members noted that rates are approaching neutral territory, suggesting limited room for additional cuts. The ECB will assess future moves each meeting, with flexibility to slow or accelerate easing.

February 26, 2025

Contrary to consensus expectations, the Bank of Thailand cut its policy rate by 25bps to 2.00%, citing weaker-than-anticipated growth and rising downside risks.
Structural weaknesses in manufacturing and heightened import competition continue to challenge economic momentum, while inflation remains subdued due to supply-side factors.
Future policy will depend on domestic demand resilience, external trade developments, and financial stability risks, with structural constraints limiting room for further rate cuts.

February 25, 2025

The Bank of Korea cut its base rate by 25bp to 2.75%, aligning with expectations, as downside risks to economic growth intensified amid stabilising inflation and slowing household debt.
Domestic demand remains weak, and US tariff policies constrain export growth. Thus, the 2025 GDP growth forecast was sharply revised downward to 1.5% from 1.9%.
Future rate cuts will depend on balancing inflation risks, exchange rate volatility, and financial stability, with a particular focus on the impact of global trade policies and domestic political uncertainty.