KUALA LUMPUR, Dec 5 (Bernama) -- Bursa Malaysia closed lower on Friday amid mixed regional market performance as investors turned cautious over a possible rate hike by the Bank of Japan (BOJ) and upcoming US economic data that may influence the Federal Reserve’s (Fed) interest rate decision next week. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) pared most earlier losses to settle 4.55 points easier, or 0.28 per cent, to 1,616.52 from Thursday’s close of 1,621.07. The benchmark index, which opened 0.37 of-a-point lower at 1,620.70, moved between 1,609.67 and 1,621.25 throughout the day. The broader market was negative, with decliners outpacing advancers 604 to 439. A total of 550 counters were unchanged, 1,151 untraded, and 18 suspended. Turnover declined to 3.17 billion units worth RM2.24 billion from 4.48 billion units worth RM2.75 billion yesterday. Rakuten Trade Sdn Bhd vice-presiden...
The Fed just fired back at Capitol Hill. In rare, blunt language, Chair Jerome Powell dismissed a GOP proposal to end interest payments to banks—calling the cost-saving claim “an illusion.”
Here’s what you need to know:
“Not saving, just spinning.” At a Senate Banking Committee hearing on Wednesday, Powell torched the argument that eliminating the Interest on Reserve Balances (IORB) would save US$1.1 trillion.
“There’s an illusion that it would save money. That is not the case.”
Why? Because the IORB, and its cousin—the Overnight Reverse Repo (ON RRP) facility—are core levers of the Fed’s interest rate control mechanism.
IORB at a Glance:
Current IORB: 4.4%
ON RRP: 4.25%
Bank reserves: US$3.2–US$3.4 trillion
“You want chaos? Go back to scarce reserves.” Powell cautioned that removing these tools would force the U.S. back to a pre-2008 “scarce reserves” system—describing it as a “long, bumpy, volatile road.”
The ample reserves regime isn’t just technical jargon—it supports financial system liquidity and enables banks to lend. Disrupting it could destabilize both policy and markets.
Politics in Play Senator Ted Cruz and others backing the cut argue it’s a fiscal fix. But Powell’s counterpunch makes one thing clear: undermining Fed tools to save money could cost far more in lost confidence and economic control.
Congress originally approved interest payments in 2006; the Fed began using them during the 2008 crisis to steady short-term markets.
Money Master Take:
Banks: Regional lenders could feel earnings pressure if IORB ends.
Bond Market: Watch for instability in short-term yields if the Fed’s grip weakens.
Investors: This battle tests Fed independence—outcomes could reshape how markets interpret future policy moves.
This isn’t just a monetary policy footnote—it’s a fight over how modern markets are managed. And if politics wins, predictability loses.
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