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...
Policy Pause Amid Uncertain Outlook
The Reserve Bank of Australia (RBA) on Tuesday kept its cash rate unchanged at 3.60%, aligning with market expectations. The central bank noted that recent data suggests third-quarter inflation may run hotter than forecast, highlighting lingering uncertainty in the economic outlook.
Governor Michele Bullock emphasized the RBA’s data-dependent approach, saying the board will reassess in November with a fuller picture of inflation, labour market trends, and updated forecasts. “That could mean a couple more reductions. It might not. I don’t know at this point and we will look at all this again in November,” she told reporters.
Market Reaction and Rate Expectations
The more cautious tone dampened hopes for near-term rate cuts. The Australian dollar strengthened 0.4% to US$0.66, while three-year bond futures slipped, reflecting diminished easing bets.
Swaps now price in just a 36% probability of a November cut, down from 55% previously, while odds for a December reduction eased to around 50% from 70%.
Balancing Growth and Inflation Risks
The RBA has eased rates three times this year — in February, May, and August — but remains wary of sticky service-sector prices. Monthly CPI readings point to potential upside surprises for the quarter.
Meanwhile, the economy expanded at its fastest annual pace in nearly two years in the second quarter, with consumption rebounding after a prolonged slump. The labour market remains tight, with unemployment holding at 4.2%, close to historic lows.
“Today’s post-meeting statement is a little more hawkish than we’d expected and heightens the risk… that the November meeting passes without a rate cut,” said Adam Boyton, head of Australian economics at ANZ. “Absent a shock, the tone also suggests we are quite close to the end of the easing cycle.”
Inflation Outlook and Policy Path
The RBA currently forecasts headline inflation — which stood at 2.1% last quarter — to rise toward 3.1% by mid-2026, as temporary electricity rebates fade. Core inflation is projected to remain anchored at 2.6% in the coming years.
Bullock described the current rate level as “a little bit restrictive” but noted that financial conditions have already eased since early 2025, with the lagged effects still filtering through the economy.
Analysts at Citi Australia said a downside inflation surprise or unexpected labour weakness in Q3 could reopen the door for a November cut. “Overall, we expect one more 25bp cut in February 2026. However, we note risks that the RBA could be done in this cycle.”
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