UOB Research Does Not Rule Out Further Rate Cuts On External Risks

KUALA LUMPUR, Nov 11 (Bernama) -- United Overseas Bank (UOB) Research does not rule out the possibility of further rate cuts over the next six months if external risks materialise. "However, narrower real interest rates may limit room for deeper rate cuts next year," it said in a note Friday. The research house also emphasised on the importance of ensuring balance in trade and investment ties and significance of stronger regional integration and China relations in view of growing anti-trade and globalisation rhetoric. "The Trans-Pacific Partnership Agreement (TPPA) is one big target along with the existing North American Free Trade Agreement during Donald Trump's election campaign," it said. The scrapping of the TPPA, it said, would be negative for Asian participants including Malaysia, Vietnam and Japan. "Given Malaysia's high degree of trade dependence, heightened external uncertainty will exert more pressure on growth. "A more inward looking and protectionist US trade policy would certainly have negative implications on Asian growth though it is still early to assess at this point," it said. UOB Research said it was also highly likely that Asian central banks would adopt an easy policy posture, especially for those with much head room. This, it said, was to counter the impact of weaker growth as a result of increased trade friction. "In such an event, aggressive interest rate cuts are likely to come from Vietnam, Indonesia, and China given their relatively high real interest rates," it added. -- BERNAMA