KUALA LUMPUR, July 29 (Bernama) -- Bursa Malaysia rebounded to close higher on Wednesday on selective buying of defensive stocks after a volatile trading session. IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said consumer products and services stocks lifted the key index higher, overcoming lingering geopolitical concerns. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 3.08 points to 1,715.56 from yesterday’s close of 1,712.48. The benchmark index, which opened 1.91 points higher at 1,714.39, moved between 1,710.79 and 1,720.59 during the day’s trading. In the broader market, gainers outstripped decliners 550 to 476, while 612 counters were unchanged, 1,129 untraded, and 48 suspended. Turnover rose to 2.96 billion units valued at RM2.48 billion from 2.94 billion units valued at RM2.56 billion on Tuesday.
Federal Reserve Bank of Dallas president Lorie Logan indicated on Monday that she anticipates more gradual rate cuts ahead for the central bank, while also supporting further reductions to the Fed’s balance sheet.
“If the economy evolves as I currently expect, a strategy of gradually lowering the policy rate toward a more normal or neutral level can help manage the risks and achieve our goals,” Logan stated during her speech at the Securities Industry and Financial Markets Association annual meeting in New York.
While Logan acknowledged that the economy is strong and stable, she also highlighted ongoing risks, including uncertainties in the labor market and the Fed’s inflation targets. This calls for the Fed to remain flexible and prepared to adjust its policy if necessary.
Logan also emphasized the Fed's ongoing quantitative tightening (QT), where the central bank has been reducing its holdings of mortgage and treasury bonds since 2022. These assets, originally purchased to stabilize markets during the pandemic, have decreased from a peak of US$9 trillion to US$7.1 trillion. Logan signaled that the QT process has room to continue and does not need to stop soon.
She explained that both QT and rate cuts are essential components of monetary policy normalization, and they are currently working in the same direction.
Despite recent volatility in money markets, Logan noted that liquidity remains more than ample and that such pressures are temporary and manageable. She also remarked on the possibility of reducing the reverse repo facility interest rate in the future to encourage the return of funds to private markets.
In her long-term view, Logan expects that money market rates should align with or slightly exceed the interest on reserve balances rate. She also reiterated the importance of banks having plans in place to meet liquidity needs and being prepared to use the Fed’s Discount Window liquidity facility when necessary.
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