MONEY MASTER

Malaysia’s central bank is expected to  keep interest rates unchanged , as  inflation remains relatively muted  despite rising global energy prices linked to geopolitical tensions. Rate Pause Expected Amid Stable Inflation Bank Negara Malaysia  is widely expected to  hold the Overnight Policy Rate (OPR) at 2.75% , according to economists surveyed. Last rate move:  25bps cut in July 2025 Policy stance:  wait-and-see amid global uncertainty This contrasts with some regional peers that are considering  policy tightening  due to stronger inflation pressures. Inflation Still Within Manageable Range Malaysia’s inflation remains  contained compared to regional economies : CPI: 1.7% (March)  vs 1.4% in February Still within the central bank’s  2026 forecast range By comparison: Philippines:  7.2% inflation Vietnam:  5.46% inflation The relatively low inflation gives policymakers  room to delay tightening . Strong Ringgit...

Bank Negara Malaysia  declared a  RM5 billion dividend for 2025 , maintaining payouts to the government despite a  moderation in earnings . Earnings Ease After Strong Prior Year BNM reported  net profit of RM12.45 billion in FY2025 , down  5.7% YoY  from RM13.16 billion. The decline was driven by: Lower total income (RM14.35 billion vs RM14.98 billion) Costs related to  reserve management and monetary operations Despite softer earnings, the central bank sustained its  second consecutive RM5 billion dividend , following a  record RM5.25 billion payout in 2024 . Strong Reserves Provide Stability A significant portion of profits —  RM7.45 billion  — was allocated to the  risk reserve , which rose to  RM155.31 billion . This reserve acts as a  financial buffer  against: Exchange rate volatility Global financial market fluctuations BNM highlighted that  85% of its assets are denominated in foreign currencies , re...

The European Central Bank may need to raise interest rates sooner than markets expect as the Iran war pushes energy prices higher and revives inflation risks, according to Governing Council member Peter Kazimir. While no move is expected at next week’s meeting,  upside inflation risks are now dominating the outlook , potentially bringing a rate hike closer than anticipated. Key Takeaways ECB hike could come sooner if energy shock persists Traders price ~40% chance of a quarter-point hike by June Further rate cuts now “off the table” Inflation risks seen shifting clearly to the upside Policymakers prepared to act without waiting for new forecasts Inflation Risks Back on the Radar The Iran conflict has triggered sharp swings in oil prices, raising concerns that: Businesses may pass through higher energy costs faster Workers may demand higher wages Inflation expectations could become unanchored According to Kazimir, the memory of the 2022 inflation shock — when euro-zone inflation exc...

Malaysia’s central bank is widely expected to keep interest rates unchanged, opting for caution as the Iran war injects fresh uncertainty into the global economy. Key Takeaways Bank Negara Malaysia likely to hold OPR at 2.75% Iran war raises inflation and supply-chain risks Oil price spike could lift Malaysia’s inflation by up to 0.6ppt Markets pricing slight probability of rate hike over next 12 months Rate Decision: All Eyes on 2.75% Bank Negara Malaysia  is expected to maintain its overnight policy rate (OPR) at  2.75% , according to all 24 economists surveyed by Bloomberg. The central bank has adjusted rates only once in the past two years — a 25 basis-point cut in July 2025. Key Point: BNM is likely to stay neutral as geopolitical risks complicate the policy outlook. Inflation Risks Rising Escalating Middle East tensions have pushed up oil prices, raising concerns about imported inflation. According to  Oversea-Chinese Banking Corp : A 10% increase in global oil pric...

Global inflation is set to accelerate as the Iran conflict disrupts energy markets, though economists expect economic growth to remain broadly resilient — for now. A Bloomberg survey shows rising concern that higher oil and gas prices will spill over into consumer costs worldwide. Inflation Set to Accelerate According to the Bloomberg survey: Half of respondents expect inflation to rise faster in the eurozone A similar share foresee higher inflation in the US Nearly 40% expect faster price growth in China The projected increase ranges between  0.3 to 0.9 percentage points above prior forecasts . Key Point: The Iran conflict is expected to lift global inflation through energy-driven price pressures. Energy Shock at the Core The main inflationary driver is oil and gas. Roughly  20% of global seaborne oil supply  passes through the Strait of Hormuz — a critical chokepoint that has effectively stalled amid the conflict. Higher energy prices could trigger: Rising airfares Incr...

Indonesia’s central bank has stepped up monitoring of financial markets as geopolitical escalation in the Middle East triggers renewed risk-off flows across emerging markets. The rupiah weakened as much as 0.45% to 16,835 per US dollar during Monday trading. What Bank Indonesia Said Bank Indonesia  said it will: Closely monitor market movements Ensure the rupiah moves in line with fundamentals Remain active in the foreign exchange market Improve effectiveness of interest-rate policy transmission Interventions will include: Spot market operations Onshore non-deliverable forwards (NDF) Offshore NDF transactions The move comes after escalation following the US attack on Iran triggered global risk aversion. Money Master Take This is a pre-emptive credibility defence, not a panic response. 1. Central Bank Is Signalling Presence Early By announcing readiness to intervene: Bank Indonesia is anchoring expectations It is discouraging speculative attacks It is limiting disorderly currency mo...

Quick Summary Bank of Korea keeps benchmark rate at  2.50% New  dot-plot chart shows majority see no change for 6 months 2026 growth forecast raised to  2.0% Chip export boom supports economic outlook Rate Decision: Pause Confirmed The  Bank of Korea  kept its benchmark interest rate unchanged at  2.50% , in line with expectations. All 34 economists polled by Reuters had predicted no move. Key point: Policymakers are signalling stability — not easing, not tightening. Dot Plot Debut: Clear Message of No Hike For the first time, the BOK introduced a  Federal Reserve-style dot plot , showing rate expectations over the next six months. Out of 21 dots 16 pointed to 2.50% Suggesting  no change until at least August This indicates a strong consensus for a  prolonged pause . Growth Outlook Improved The BOK raised its 2026 growth forecast to  2.0%  from 1.8%. The upgrade reflects: Strong semiconductor exports Chip boom led by: Samsung Electr...

Bank Negara Malaysia  left its  Overnight Policy Rate (OPR) unchanged at 2.75% , a widely anticipated decision that reflects confidence in Malaysia’s stable growth and muted inflation outlook. The decision, announced after the Monetary Policy Committee’s first meeting of 2026, comes after a  25-basis-point rate cut in July 2025 , the country’s first easing move in five years. Since then, policymakers have opted to stay on hold, judging current conditions to be supportive enough without further stimulus. In its statement, BNM said the  current policy stance remains appropriate , balancing economic expansion with price stability, while stressing that it will continue to assess risks to growth and inflation amid a volatile global backdrop. Inflation dynamics remain favourable. The central bank expects  headline inflation to stay moderate in 2026 , helped by easing global cost pressures, while  core inflation is projected to remain stable and close to its long-...

Key Takeaway:  The Reserve Bank of New Zealand (RBNZ) delivered a larger-than-expected  50-basis-point rate cut  to 2.50%, underscoring growing concern over the country’s fragile economy and keeping the door open for further monetary easing. Policy Decision The  RBNZ  lowered its  Official Cash Rate (OCR)  by  50 bps  to  2.50% , exceeding market expectations for a smaller move. In its statement, the central bank said it remains  “open to further reductions”  to support inflation sustainably near the 2% midpoint of its target range. The move marks the latest step in an aggressive easing cycle that has seen the RBNZ  cut rates by 300 bps since August 2024 , as growth momentum stalls and inflation remains within the  1–3% target band . Market Reaction Asset Latest Move NZD/USD 0.5745 -0.90% 2-year swap rate 2.521% ↓ from 2.619% The  New Zealand dollar weakened sharply , falling nearly 1% against the U.S. dollar, wh...

  Key Forecasts Policy Rate : Riksbank expected to  cut 50bps this year to 1.5% by November  (vs. previous forecast of 1.75%). Growth Outlook : 2025 GDP revised down to  1.0%  (from 1.5% prior). Growth seen accelerating to  2.3% in 2026 , easing to  2.2% in 2027 . Unemployment : Projected to decline gradually from  8.7% (2025)  →  7.9% (2027) . Macro Context Exports hit : US tariff hikes weighing on Swedish exporters like  Volvo Cars , delaying recovery momentum. Riksbank signal : Central bank has already hinted a cut from the current  2.0% rate  before year-end remains “on the table.” Policy support needed : Swedbank stresses that stable growth requires both monetary and fiscal stimulus. Rate Path Outlook 2025 : Cut to  1.5% by Nov . 2026 : Rate held steady at  1.5% . 2027 : Modest hike back to  1.75%  as economy stabilizes. Investor Takeaway Bonds : Lower rate path supportive for Swedish fixed income,...

Limited Appetite for Rate Cuts Among Fed Policymakers Despite headline-grabbing dissents from two prominent Federal Reserve governors, the  July FOMC meeting minutes suggest 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 rev...

Norway's central bank  kept interest rates steady at a 17-year high of 4.5% , postponing a long-expected rate cut as  inflation rose faster than anticipated . Key Points: Norges Bank had earlier hinted  at a 0.25% rate cut in March, but reversed course due to inflation risks. Core inflation in February jumped to 3.4%  from 2.8% in January — far above the 2% target. Governor Ida Wolden Bache warned that  cutting rates too soon may fuel further price rises . The policy rate is now projected to fall to  4.0% by year-end , higher than the previous forecast of 3.75%. Longer-term, Norges Bank sees a  gradual rate decline  in the coming years. The  Norwegian crown strengthened  slightly following the decision, trading at 11.34 against the euro. Economic Outlook: Norges Bank raised its  core inflation forecast for 2025 to 3.4% , up from 2.7%, and 2.9% for 2026. Despite global uncertainty,  Norwegian businesses expect stable growth , wi...

The Bank of Russia unexpectedly maintained its key interest rate at a record-high  21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to  8.9%  in November, well above the central bank’s  4% target , with inflation expectations reaching  13.9%  in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s  200-basis point hike  as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...

Key Takeaways: Policy Shift Toward Caution: Cleveland Fed President Beth Hammack stated the Fed is "at or near" the point where slowing the pace of rate reductions is appropriate. She emphasized maintaining a “modestly restrictive” stance as the economy remains strong and inflation elevated. Rate Cut Expectations: Hammack agreed with market forecasts of one more rate cut by January and a few additional reductions in 2025. Future decisions will be data-dependent , with a cautious approach to avoid over-easing prematurely. Neutral Rate and Restrictive Policy: Interest rates may be close to the neutral level , where they neither slow nor stimulate the economy. Hammack highlighted the need to move gradually to calibrate policy for sustainable economic stability. Economic Context: Recent months showed stronger-than-expected inflation, growth, and labor market performance , necessitating a slower pace of cuts . Inflation remains the top priority, with housing inflation and a h...

China’s central bank moved to shore up the yuan for the second consecutive day by setting a stronger-than-expected reference rate of 7.1966 per dollar , beating analyst estimates by 359 pips . This follows an even wider gap of 445 pips on Wednesday, the largest since August . The yuan is under pressure as the US dollar reaches a two-year high after Donald Trump’s election victory, fueled by concerns that his administration might impose 60% tariffs on Chinese goods , which would impact Sino-US trade significantly. Previously, the People’s Bank of China (PBOC) had allowed the yuan to weaken alongside other currencies, but more than half of Bloomberg’s survey respondents suggested that Beijing might further devalue the yuan to boost Chinese export competitiveness amidst potential trade barriers. The PBOC’s daily yuan fixing —a tool that controls the onshore yuan’s movement within a 2% range —remains a key measure for managing currency stability. According to Kiyong Seong, Asia macro...

The Bank of England (BOE) will reduce the cash buffer it holds against losses as it scales back its quantitative easing (QE) bond-buying program . Officials said this move aims to deliver better "value for money" for taxpayers. BOE Governor Andrew Bailey and Chancellor of the Exchequer Rachel Reeves agreed on the adjustments, which follow a reduction in the Asset Purchase Facility (APF) from £895 billion to £655 billion since early 2022. This reduction potentially offered Reeves additional budgetary flexibility for the recent budget plan on October 30 . Background : The BOE initially implemented QE to support economic growth after the 2008 financial crisis and 2020 pandemic , acquiring bonds that have now resulted in projected lifetime losses between £50 billion and £100 billion . Although QE generated a £123 billion profit when interest rates were near zero, it started to incur losses once rates surpassed 2% in 2022. Reeves confirmed that the cash management framework...

The Thai baht fell over 1% against the US dollar on Tuesday, hitting 34.739 per dollar — its weakest level since August — as investors grew wary of Thailand's central bank independence . The decline follows news that Kittiratt Na-Ranong , a former finance minister and critic of the Bank of Thailand’s (BOT) monetary policy, is set to be appointed as the central bank’s chairman. Kittiratt’s appointment has raised concerns that the government is increasing pressure on the BOT to cut interest rates , potentially affecting its autonomy. “ As long as the central bank’s independence is at risk, investors will likely favor dollar-baht trades,” commented Eugenia Victorino, head of Asia strategy at Skandinaviska Enskilda Banken. The baht has declined over 7% this quarter , the weakest performance among Asian currencies, as pressure on BOT to lower borrowing costs grows. Compounding the baht’s outlook, Donald Trump’s recent election victory has heightened fears of new trade tariffs , whic...

The European Central Bank (ECB) is facing increasing internal divergence as officials debate the next steps in interest rate cuts , quantitative tightening (QT) , and the ongoing battle with inflation. While the ECB has largely succeeded in steering the euro-zone economy toward its 2% inflation target, the path forward is becoming less clear as policymakers differ on how to proceed. Tensions surfaced last week during discussions in Washington, where policymakers shared differing views on rate cuts , inflation risks , and how to communicate the ECB’s strategy. This comes ahead of the crucial December meeting, where the ECB is expected to make decisions that could impact the broader economic outlook. Policymakers will soon review key data, including inflation figures for October and a report on Germany’s recession, which will provide a clearer picture of the euro zone’s economic health. Financial markets are currently pricing in about 35 basis points of rate cuts for December, leavi...