Malaysia faces US tariffs from position of strength, central bank says
Forget rate cuts, Bank Negara Malaysia insists the country’s economic fundamentals can withstand Trump’s tariff onslaught
Strong investment activity, resilient domestic demand and diversified trade partners would help provide some support to the economy, Bank Negara Malaysia Governor Abdul Rasheed Ghaffour said in an interview. Policymakers also had numerous policy tools to mitigate the impact of sweeping US levies, he added.
“Monetary policy cannot resolve trade wars. It’s not the best tool to do it,” Abdul Rasheed said on Wednesday.
“What’s important for us is what’s the mandate that we want. We want to achieve price stability that provides sustainable economic growth to the country.”
Traders are pricing in a 25 basis point reduction in the bank’s policy rate within the next six months, according to swaps data, as sweeping US tariffs raise concerns over slower growth. Economists have lowered this year’s growth forecasts for Malaysia, which faces a 24 per cent levy. The top executive of Malaysia’s largest lender Maybank, Khairussaleh Ramli, said in a separate interview that there was room for a 25-basis-point cut.
The central bank has kept the benchmark rate at 3 per cent since May 2023 after a year-long tightening cycle.