KUALA LUMPUR, April 8 (Bernama) -- The FTSE Bursa Malaysia KLCI (FBM KLCI) erased earlier gains to close marginally lower on Tuesday as mild bargain hunting activities were offset by cautious mode over ongoing global uncertainties. At 5 pm, the benchmark index slipped 0.24 of-a-point, or 0.02 per cent, to 1,443.56 from yesterday’s close of 1,443.80. The benchmark index opened 7.63 points firmer at 1,451.43 and climbed to as high as 1,454.58 in early trade before retreating to a low of 1,440.89 towards the end of the morning trading session. It then moved in a yo-yo mode during the afternoon session. In contrast, the broader market was positive with gainers outpacing decliners 669 to 367, while 419 counters were unchanged, 894 counters untraded, and nine others suspended. Turnover dwindled to 3.32 billion units valued at RM2.83 billion against 5.35 billion units valued at RM4.67 billion on Monday.
Federal Reserve Governor Adriana Kugler warned that the new wave of U.S. tariffs could have lasting inflationary effects, complicating the Fed’s policy path and potentially distorting the broader economy.
Key Points
Kugler cautioned that tariffs may drive more than a one-off price shock, particularly as they affect intermediate goods like steel and aluminum.
These materials are used across multiple industries, meaning price increases could ripple through supply chains and persist over time.
“This will affect all sectors through supply chain networks... It may take longer for that to filter through the economy.”— Adriana Kugler, Federal Reserve Governor
Broader Concerns from the Fed
Kugler outlined three core risks from the current tariff regime:
Prolonged inflation due to supply chain disruptions.
Capital misallocation, as the U.S. may shift production toward industries lacking comparative advantage.
Distorted inflation expectations, if consumers and businesses adjust behavior based on tariff headlines.
“We’re paying higher prices for things that could have been produced more cheaply somewhere else.”
Policy Implications
Kugler supports holding interest rates steady, citing continued upside inflation risk and robust growth.
Consumer behavior—such as pull-forward demand for autos—could temporarily lift growth figures, but raises inflation risk in the short term.
The Fed’s latest projections (March 18–19) already point to slower growth and higher inflation than previously anticipated in December.
Market Relevance
Kugler’s remarks align with increasing concern that Trump’s global tariff package (up to 46% on some countries, 20% on the EU, and 25% on Canada and Mexico) could fuel stagflation pressures—a mix of slowing output and sticky inflation.
Retaliatory tariffs from other nations could deepen this risk, with ripple effects on trade-sensitive sectors and global capital flows.
Key Takeaways
Tariffs are now seen by the Fed as a structural inflation risk, not just a transitory pricing event.
Supply chain disruption and policy uncertainty may delay rate cuts.
Investors should watch for:
Consumer demand distortions
Shifts in core inflation
Sector-specific pressure points, especially in manufacturing, autos, and construction.
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