Bank Negara cuts OPR by half percentage point

Worried about a growing risk of an economic contraction this year, Bank Negara has cut the overnight policy rate (OPR) by 50 basis points, or half a percentage point, to 2% as the global economy continues to deteriorate.

In a statement yesterday, the central bank announced the statutory reserve requirement (SRR) would also be cut from 2% to 1% from March 1 to reduce the cost to banks.

The ceiling and floor rates of the corridor for the OPR were correspondingly reduced to 2.25% and 1.75% respectively.

“The major advanced economies are experiencing a deepening economic contraction, while the regional economies are experiencing a rapid slowdown,’’ said Bank Negara in its monetary policy statement.

“The impact of the rapid decline in global demand on trade, production and investment activities in the Asian region has intensified.”

It said domestic economic conditions were expected to continue to remain challenging in the coming quarters with the continued deterioration of the global economy.

“While this has raised the risk of an economic contraction in 2009, the prospects remain intact for an economic recovery once global conditions stabilise given that the economy is not over-leveraged, the financial system remains sound, and the external position is healthy,’’ Bank Negara said.

The central bank said the turmoil in the international financial markets had also been protracted and that while a number of economies had put in place stimulus measures to manage the downturn, their impact on the economy had yet to take effect.

“The downside risks to the global economic outlook have increased significantly,’’ it added.

On Jan 21, Bank Negara cut the OPR by 75 basis points to 2.5% and slashed the SRR from 3.5% to 2%.

“This is the first time since the crisis erupted that the central bank has acknowledged the possibility of the economy registering a contraction this year,’’ said Maybank Investment Bank chief economist Suhaimi Illias.

“They are also reacting to the fourth quarter GDP number that will be released this week.’’

Bank Negara said the international economic and financial environment had deteriorated sharply in the recent quarter and that the Malaysian economy had been adversely impacted by these global developments.

“Exports and industrial production have declined steeply, while private investment activities have slowed down in recent months as businesses scaled back their spending. Consumer sentiment has also been affected by the weakening conditions in the labour market,’’ it said.

With inflation on a moderating trend, Bank Negara said the task of macroeconomic policy was to support domestic demand until conditions in the global economy show signs of normalisation.

“Further measures will be introduced to ensure continuous access to credit as well as to minimise the impact of the economic downturn on specific affected groups,’’ it said.

Bank Negara cuts OPR by 75 basis points

News: Bank Negara has reduced the overnight policy rate (OPR) by 75 basis points to 2.5% and reduced the statutory reserve requirement (SRR) from 3.5% to 2%, effective from Feb 1.

It said on Wednesday the ceiling and floor rates of the corridor for the OPR were correspondingly reduced to 2.75% and 2.25% respectively.

“With the heightened downside risks to growth, the magnitude of the reductions in the OPR and the SRR are aimed to be pre-emptive in providing a more supportive monetary environment for the domestic economy,” it said in a statement released after the Monetary Policy Committee (MPC) meeting.

Bank Negara said the international economic and financial conditions had deteriorated much more significantly in the recent period.

It said the contraction in global demand and trade, combined with the reduction in global commodity prices, had affected the export earnings of many of the regional economies, including Malaysia.

“These contractionary factors have been exacerbated by the protracted turmoil in the international financial markets,” it said.

The central said the urgent implementation of policy measures will be key towards ensuring the Malaysian economy would continue to experience positive growth in 2009.

On inflation, it said the moderating growth and the significantly lower commodity prices had impacted the inflation rate which had continued to decelerate to 4.4% in December 2008.

“This deceleration is expected to continue with the weaker demand conditions and lower imported inflation,” it said.

Bank Negara said given that the Malaysian banking system remained fundamentally sound, the central bank would continue to ensure access to credit to all sectors of the economy, and that the reduction in interest rates would be reflected in lower borrowing costs.

Fuel prices reduced by another 10 sen

News: Petrol and diesel prices will be reduced by another 10 sen from Tuesday.
The price of RON97 petrol is now RM1.80, while RON92 is selling at RM1.70 a litre. The pump price of diesel now stands at RM1.70 a litre.

In a statement, Prime Minister Datuk Seri Abdullah Ahmad Badawi said the reduction in the fuel prices was in accordance with the drop in the global crude oil price.

The retail price of petrol and diesel had been gradually lowered from its high of RM2.70 and RM2.58 respectively in June.

P2P connection slow using STREAMYX

Last few weeks ago, I am start to experiance a very slow download speed of my P2P (peer-to-peer) connection through the BitComet using Streamyx (I think it should be everyone problem).

Normally, the first things we will blamed is the ISP (Internet Service Provider) who block the P2P application, but after reading the articles from this blog, http://www.malaysianwireless.com/2008/11/p2p-yes-or-no.html, I am quite agreed with the statement which he is mentioned. What about you?

Here are his opinion regarding the issue:

Not blocking P2P will only benefit certain users while most users will be effected by not getting speed they have paid for normal Internet usage.

I am not against P2P as I do use P2P sometimes but I have came across users that turns on their P2P application 24 hours a day using up as much bandwidth as they can but paying for a service that is on a shared basis.

I am also not saying that it is wrong to use P2P but it is wrong to download illegal files that includes music or movies that are freely available on the net.

It is wrong for ISPs like TM to block P2P on their network but nothing can be done because their subscriber has agreed on their terms and condition when they sign the Streamyx application form.

ISPs such as Maxis should not have such a limited data limit per month just because few percent of their users are hogging their data network after all the throttling methods they have use.

Few months back, P1 was said to be considering a P2P package for heavy users but I have heard nothing since then. I believe such move will allow better management of the network whereas normal users on the shared network gets to enjoy the speed they have paid for while those heavy users pays for the dedicated speed.

Another method that can be used is to charge users who exceeds the available bandwidth of the month. For an example, users can opt for a secondary package(example: RM20 for 5GB) if they exceed the allowed 20GB data limit of the month.

ISPs are having problem to manage heavy traffic from heavy users while normal users are affected by these heavy users who excessively use up the bandwidth.It is believed that a normal Maxis Broadband user uses an average 15GB a month, however there has been no official report on this.

No subscribers wants a slow internet connection and no ISPs wants a heavy user on their shared internet network.

Soon, the Government will ensure that all broadband users will enjoy at least 70% of the speed they are paying for, 90% of the time.

Internet Providers should ensure that ALL user gets to the enjoy the speed they have paid for and manage their network more efficiently. Consumers should understand that they are using a shared Internet network which must be use fairly without impacting other users on the same network.It is wrong to block P2P application in an Internet network but it won't be wrong to manage excessive usage from an heavy user on a shared network.

History of Petrol & Diesel Price in Malaysia

After fuel price hike at 5/6/2008, there are total 6 times of price reduction for petrol & diesel as stated below:

Petrol:

23/8/2008- RM2.55 (reduced RM0.15)
25/9/2008- RM2.45 (reduced RM0.10)
15/10/2008- RM2.30 (reduced RM0.15)
1/11/2008- RM2.15 (reduced RM0.15)
18/11/2008- RM2.00 (reduced RM0.15)
3/12/2008- RM1.90 (reduced RM0.10)

Diesel:

23/8/2008- RM2.50 (reduced RM0.08)
25/9/2008- RM2.40 (reduced RM0.10)
15/10/2008- RM2.20 (reduced RM0.20)
1/11/2008- RM2.05 (reduced RM0.15)
18/11/2008- RM1.90 educed (reduced RM0.15)
3/12/2008- RM1.80 (reduced RM0.10)

Fuel prices down another 10sen

The retail price of petrol and diesel will go down another 10sen effective Wednesday (3/12/2008). The price of RON97 petrol would be down to RM1.90 per litre from RM2.00, while RON92 petrol and diesel would be down to RM1.80 from RM1.90 per litre.