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KUALA LUMPUR: On Tuesday, Malaysia’s central bank cut interest rates to their lowest level since the 2009 global financial crisis as the COVID-19 pandemic hits the economy.
The Southeast Asian nation has teamed up with other countries around the world to ease monetary policy as the virus closes businesses and confines people to their homes.
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Bank Negara Malaysia cut the rate by 50 basis points to 2 percent, as economists expected, in its third cut this year.
It came a day after the government allowed most companies to reopen after a six-week shutdown.
READ: Malaysia’s economy could shrink more than previous forecasts, says finance minister
The Malaysian outbreak has been small, registering around 6,000 cases and 100 deaths, but the prime minister has said that the restrictions so far have cost the economy RM63 billion ($ 14.6 billion).
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“Global economic conditions have weakened significantly,” the bank said in a statement.
“Globally widespread containment measures, international border closures and the resulting weak external demand environment” will affect Malaysia’s economy, he added.
READ: COVID-19: Malaysia will open ‘almost all’ economic sectors from May 4 with health protocols, says Prime Minister Muhyiddin
The government has announced billions of dollars of stimulus measures to mitigate the impact of the virus, including tax exemptions and monetary assistance.
Faced with uncertainty about how quickly the global economy will recover from the pandemic, economists did not rule out further relaxation this year.
OCBC Bank economist Wellian Wiranto said the central bank “could cut further if the pace of recovery … falters even after several locks are lifted.”
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