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...
Key Takeaway: JPMorgan’s chief US economist Michael Feroli expects the Fed to deliver two more rate cuts while highlighting surprisingly strong productivity growth in 3Q, supported by steady GDP, resilient labor markets, and tech-driven capital spending.
The debate inside the Federal Reserve continues to heat up as policymakers weigh the pace of interest-rate cuts. While newly appointed Fed governor Stephen Miran has called for aggressive easing to protect jobs, the majority of officials — including Cleveland’s Beth Hammack — remain in favor of a gradual approach.
JPMorgan’s Michael Feroli said Miran’s call is unlikely to gain traction unless the labor market deteriorates sharply. For now, slowing but stable hiring and low layoffs suggest a maturing cycle, not a distressed one. “Job growth has slowed, but we’re not seeing broad-based job losses,” he noted.
Feroli emphasized that despite softer hiring, GDP growth and retail sales remain solid, while immigration-driven slower labor supply has boosted productivity numbers. He expects 3Q productivity to show another strong gain, following encouraging results in 2Q.
On wages, Feroli sees pay growth in a “sweet spot” at 3–4%, broadly consistent with 2% inflation and higher productivity, creating a balanced backdrop for households. However, tariffs remain a risk, with companies warning of continued cost pass-through into 2026, though Feroli believes inflation should moderate as these pressures fade.
A bright spot has been capital expenditure (CapEx), particularly in technology and AI-linked infrastructure. Feroli estimates that data center construction alone added about half a percentage point to 1H GDP growth (annualized). While AI’s broader productivity impact is still unclear, he notes that its spillover into construction and tech spending has already surprised to the upside.
Looking ahead, Feroli cautioned that the Fed’s debate around the “neutral rate” — the level of rates that neither stimulates nor slows growth — remains unsettled. With financial conditions easy, stocks at record highs, and the dollar weaker, arguments that policy is too restrictive appear less convincing.
Bottom Line: Feroli expects the Fed to cut rates twice more while productivity gains provide a cushion for growth. For investors, that combination — looser policy and efficiency-driven output — could extend the economic expansion, though inflation risks from tariffs remain in play.
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