KUALA LUMPUR, June 12 (Bernama) -- Selected blue-chip counters trading at attractive valuations helped Bursa Malaysia close higher on Friday, despite cautious market sentiment driven by developments in West Asia, volatility in crude oil prices and uncertainty over the global interest rate outlook. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose by 4.10 points or 0.24 per cent to 1,683.63 compared with Thursday's close of 1,679.53. The key index opened 5.34 points stronger at 1,684.87 earlier today and moved between 1,679.72 and 1,685.39 throughout the session. Market breadth was negative, with losers leading gainers 533 to 479, while 561 counters were unchanged, 1,130 untraded and 33 suspended. Turnover fell to 2.79 billion units worth RM2.31 billion from 3.32 billion units worth RM2.88 billion yesterday.
Limited Appetite for Rate Cuts Among Fed Policymakers
Despite headline-grabbing dissents from two prominent Federal Reserve governors, the July FOMC meeting minutessuggest overwhelming consensus among policymakers to hold the federal funds rate steady at 4.25%–4.50%. According to the minutes released on Wednesday:
“Almost all participants viewed it as appropriate to maintain the target range…”
Only Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller favored a 25-basis-point cut, citing concerns over labor market deterioration. This marks the first instance of multiple governor-level dissents since 1993, yet no other members joined their call.
Data Post-Meeting Validates Concerns—But Too Late?
Within 48 hours of the July 29–30 meeting, new labor market data showed:
Substantially lower job creation in July
A rising unemployment rate
Labor force participation at its weakest since 2022
More critically, historical revisions erased over 250,000 jobs from May and June estimates—undermining the prevailing narrative of a resilient labor market. President Trump reacted forcefully, firing the Bureau of Labor Statistics chief, further intensifying pressure on the central bank.
Inflation Concerns Persist Amid Trade Tariff Impact
Even with a softening labor market, the Fed remains cautious due to stubborn inflation risks, particularly linked to:
Higher-than-expected July CPI core inflation
An unexpected spike in producer prices
Tariff-related cost pressures on goods
The minutes revealed that “the effects of higher tariffs had become more apparent”, although officials noted it remains too early to judge their full impact on inflation dynamics. Some policymakers suggested the policy rate might be closer to neutral than previously estimated.
September Decision Hinges on Balancing Tradeoffs
As of publication, CME FedWatch Tool assigns an 85% probability of a rate cut at the upcoming September 16–17 meeting, but the Fed faces a complex backdrop:
Inflation pressures persist despite policy restraint
Employment data is weakening faster than expected
Trade policy volatility adds further uncertainty
Policymakers now confront potential difficult tradeoffs if elevated inflation endures while the labor market falters.
Trump Eyes Shake-Up in Central Bank Leadership
President Trump has intensified efforts to reshape the Fed, calling for the resignation of Governor Lisa Cook amid mortgage-related controversies and nominating Stephen Miran, current chair of the Council of Economic Advisers, to replace former governor Adriana Kugler.
Powell’s final keynote speech as Fed Chair—scheduled for Friday at Jackson Hole—will be closely scrutinized for any shift in tone. With his term expiring in May 2026 and a new nomination looming, markets await signs of alignment with either the dovish or inflation-hawk camp.
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