Thursday, January 28, 2010

Gradual interest rate rise seen

Gradual interest rate rise seen

By LAALITHA HUNT

laalhunt@thestar.com.my

PETALING JAYA: Benchmark interest rates are set to gradually rise by 25 to 75 basis points before year-end after Bank Negara signalled its readiness to normalise interest rates in due course as a pre-emptive move to prevent the build-up of financial imbalances, say economists.

RAM Holdings Bhd chief economist Dr Yeah Kim Leng said although the overnight policy rate (OPR) was maintained on Tuesday, the central bank had signalled its discomfort over holding interest rate too low and for a long period of time.

“As exemplified by the US subprime mortgage and housing market crisis, which some analysts attributed to overly low interest rates being stayed too long, loose monetary policies inevitably spawn overleveraging, excessive risk-taking and asset bubbles,” he told StarBiz yesterday.

At 2% currently, the OPR was lower than the average 2.5% to 2.8% seen in the year following the country’s most severe recession in 1998, he said.

“Depositors and savers are currently bearing the brunt of a low interest rate environment, which is aimed at spurring domestic demand,” he added.

With headline inflation or consumer price index turning positive in December, Yeah expected the upward adjustment to take place in the first quarter of this year, but the quantum would likely be gradual given that domestic demand was not expected to accelerate strongly as global economic recovery, especially growth in the advanced economies, remained sub-par and tentative.

“We expect a 25-basis point adjustment to bring the interest rate level to a more ‘normal’ level which we define as one that remains low and supportive of domestic financing and other economic activities,” he said.

However, he noted that the case for a 50-basis point hike was less compelling unless both domestic and external demand surged in the coming months.

“Nonetheless, a 50-basis point adjustment cannot be ruled out as a front-loaded measure to normalise the interest rate for the rest of the year,” he added.

Meanwhile, Malaysian Rating Corp Bhd chief economist Zahidi Alias noted that it was imperative that the quantum of any OPR hike take into consideration the growth of the economy relative to its potential output.

“One must bear in mind that at this juncture, policymakers might not be aggressive in hiking rates to ensure that the economy continues to pick up pace, and households do not become unduly burdened by heightened debt-repayment amounts,” he told StarBiz.

Nevertheless, if the economy persistently expanded more than its potential rate which the International Monetary Fund estimated to be around 4.25%, interest rate hikes were likely to happen to prevent the economy from overheating, Zahidi added.

Maybank Investment Bank Bhd (Maybank IB) chief economist Suhaimi Illias said in a note Maybank IB was prompted to revise its OPR forecast to a 50 to 75-basis point hike compared with no change previously following Bank Negara’s latest indication.

“Still, the expected magnitude of increase in OPR this year is less than the 150-basis point cuts between November 2008 and February 2009. This should still keep the monetary policy stance accommodative to spur private sector demand (consumer and business spending) as the Government aims to trim its deficit spending, hence public sector demand, in the medium term starting next year, to RM40.5bil (5.6% of GDP) from RM51.1bil (7.4% of GDP) last year, and eventually to -3% of GDP by 2015,” he said.

Meanwhile, Kenanga Research said although the sudden change in the central bank’s tone would likely be interpreted as a signal that it may soon raise rates, the research house believed that it generally reflected Bank Negara’s genuine concern and way of managing market expectations.

“The current unsettling global financial environment as well as the modest recovery trend outweighs any inflationary concern or unchecked asset bubble at the moment. Hence, we expect the OPR to be raised incrementally from mid-2010, from 25 to 50 basis points to 2.5% by year-end,” it said.

OSK Research in a latest update concurred that Bank Negara would hold interest rates steady till June in its efforts to boost liquidity as the Malaysian economy was still finding its footing with third quarter GDP still contracting at 1.2% and unemployment coming in at 3.6%.

“However, we do not discount a potential hike in interest rate in the second half of 2010 as the economy gains traction and inflation exerts its influence.

“Even if there is a hike, we believe it would be on a gradual basis, for example by 25 basis points per policy meeting, to ensure the sustainability of economic recovery,” it added.

CIMB Research also expects interest rates to be raised at a measured pace, and possibly sooner than expected in the first half of the year.

It has revised its OPR target for the year to 2.5% from 2% for 2010.

“As this will still be lower than the historical OPR since 2004, the rate move will not have a significant impact on demand,” it said.

Monday, January 25, 2010

Lelongan Di Tan Corp

Lama betul tak mencoret kat blog nie..dah dekat berbualan bulan rasanya...

Baru2 nei ada masuk lelong di Tan Corp,Jalan Ampang, target satu rumah di Damansara Damai,Apt Impian no G008,RP adalah 72k,Market price boleh cecah rm95k-100k.
Ada 2 orang pembida utuk rumah tu,at last rege jatuh rm82k. Kalau campur duit maintenance,lawyer,cukai api dan air rege boleh jatuh rm 89k, masih ada untung lagi.
Aku tak masuk kerana dah agak rumah tu agak hot jugak,walaupun dah sediakan 10%, simpan jer bank deraf.

Tak per mungkin tak rezeki untuk rumah tu,walaupun dah buat banyak servey seperti pergi pejabat lawyer,pejabat tanah,pejabat maintenace,TNB dsb.

Tak per nanti akan cari lelongan baru,aku target 2010 at least ada satu lagi rumah...amin