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...
A Careful Approach at Jackson Hole
At the Jackson Hole symposium, Federal Reserve Chair Jerome Powell hinted at a likely interest-rate cut in September. But unlike the aggressive easing cycle of 2023, Powell stressed a measured approach, making it clear that investors shouldn’t expect rapid or repeated cuts unless economic conditions worsen.
Why the Fed Is Hesitant
Labor Market Softness: Powell noted “curious” signs of weakness despite low unemployment. Both labor supply and demand are slipping, raising concerns of a sudden deterioration.
Inflation Risks: With inflation running close to 3% (above the Fed’s 2% target), several officials remain wary of cutting too soon. Tariff-driven price pressures could persist if businesses continue testing consumer tolerance for higher prices.
Split Among Fed Officials: Some policymakers favor more aggressive easing, while others argue rate cuts are premature given sticky inflation.
Powell’s Strategy
Powell echoed Fed governor Christopher Waller’s earlier argument that cooling the labor market could help prevent temporary cost shocks (like tariffs) from spiraling into lasting inflation.
His cautious tone marks a shift from last year, when he clearly signaled multiple rate cuts. Now, with rates already a full point lower than in 2023 and inflation still elevated, the Fed is more restrained.
Market Takeaways for Investors
September Cut Likely, But Limited: The Fed appears poised for a single cut next month, with further moves dependent on labor market data and inflation trends.
Inflation Still a Concern: Price pressures remain elevated, limiting the scope for aggressive easing.
Potential for Stop-and-Go Policy: Economists warn that cutting now could force hikes again in 2026, risking market volatility.
Borrowing Costs Won’t Drop Sharply: Mortgage rates and business loans are unlikely to see a steep decline unless the labor market weakens significantly.
The Bottom Line
Powell is still aiming for a soft landing—slowing inflation without triggering a deep recession. But the path is narrower this year, and the Fed’s moves are expected to be slower and more data-dependent than last year’s quick cuts.
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