US President Donald Trump’s policies to reshape global supply chains and trade flows will result in slower economic growth as well as rising uncertainties for the rest of the world. In response, central banks are lowering interest rates to support their domestic economies. That includes Bank Negara Malaysia — the central bank cut its overnight policy rate (OPR) by 25 basis points, for the first time since the Covid-19 pandemic, in July. The OPR was reduced from 3% to 2.75%, leading to corresponding reductions in both the bank lending and savings rates.
The largest banks are now offering 12-month fixed deposit rates of just about 2.2%. Bad news for savers and especially retirees depending on the income stream. But even before this latest interest rate cut, bank deposit rates were barely sufficient to cover inflation, if at all. The search for stability and yields are the primary reasons why real estate investment trusts (REITs) have outperformed the broader Bursa Malaysia.
