KUALA LUMPUR, July 30 (Bernama) -- Bursa Malaysia's key index closed at an intraday high today, supported by continued buying interest even as renewed geopolitical tensions and a weaker overnight lead from Wall Street following the US Federal Reserve's (Fed) decision to stand pat on interest rates weighed on broader sentiment. The Fed has decided to hold rates steady for the fifth consecutive meeting, with the Federal Funds Rate unchanged between 3.50 per cent and 3.75 per cent. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 4.84 points to 1,720.40 from yesterday’s close of 1,715.56. The benchmark index, which opened 1.14 points lower at 1,714.42, hit its lowest level of 1,710.69 in early trade before gaining momentum for the rest of the day. However, the broader market was negative with losers outpacing gainers 581 to 411, while 612 counters were unchanged, 1,173 untraded, and 87 suspended. Turnover declined to 2.49 billion units valued at RM2.25 billion from ...
The Bank of England (BOE) is widely expected to cut its benchmark rate by 25 basis points to 4% this Thursday, maintaining its gradual once-a-quarter easing cycle despite facing the fastest inflation in 17 months. The move highlights policymakers’ growing concerns over economic growth and rising unemployment amid tax hikes and weaker consumer demand.
Growth Concerns Trump Inflation Worries
Back-to-back GDP contractions and mounting job losses have pushed the BOE to prioritize growth over price pressures. Employers are scaling back hiring following a £26 billion payroll tax increase and a sharp hike in the minimum wage under the Labour government’s first budget.
Net Interest Margin Outlook: BOE to stick with a cautious tone amid upside inflation surprises.
GDP Impact: Weaker consumer spending and business investment underpin the dovish stance.
Bailey Signals Temporary Price Pressures
Governor Andrew Bailey has guided markets to expect gradual cuts, emphasizing that the inflation spike is likely temporary. Updated quarterly forecasts will be released alongside the decision, with investors also eyeing any changes to the BOE’s plan for quantitative tightening as gilt yields show signs of stress.
Market Implications
Gilts: Speculation that the BOE may limit active bond sales could support long-dated yields.
Sterling: Traders are bracing for more volatility as markets weigh growth risks against sticky inflation.
Rate Path: A cautious cut may keep expectations anchored for only one more reduction in 2025.
Investor Takeaway
For equity and fixed-income investors, the focus shifts to the BOE’s tone: any hint of accelerated easing could support UK risk assets in the short term, while a more hawkish inflation outlook may cap gains. With UK growth faltering and policy easing on the table, defensive sectors and high-dividend plays could outperform as the central bank balances between supporting growth and containing price pressures.
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