Shamsiah: Effective policy making needs global perspective

KUALA LUMPUR: Monetary and fiscal policies should have global perspectives as any fallout often spread across the borders, says Bank Negara governor Datuk Nor Shamsiah Mohd Yunus.

She said in a world, which is increasingly buffeted by protectionism and the risk of financial contagion, central banks must cooperate with each other.

“However, independent a central bank is from the government, it cannot function in isolation. Cooperation at the national, regional and international levels is necessary.

“As guardians of the financial system, central bankers must maintain public trust,” she said at the commemoration of Bank Negara’s first Malaysian governor Tun Ismail Ali’s centennial birthday and the launch of “Tun PETALING JAYA: Intensifying competition and cost pressure have turned the near-term outlook of the Malaysian aviation sector more challenging, following a disappointing earnings performance in the second quarter of financial year of 2018 (2Q18).

Maybank IB Research, which downgraded its view on the sector to “neutral”, expect the domestic aviation sector’s core net profit for the financial year of 2018 to contract by 9.8%.

This was following the weaker 2Q18 results and the latest revisions for higher jet fuel cost and weaker ringgit against the US dollar.

For context, the sector’s earnings in 2Q18 tumbled by 48% year-on-year (y-o-y) to RM266mil due to yield attrition and cost increase.

Average fuel price rose sharply by 41% y-o-y to US$84.6 per barrel, causing many marginal and longer-haul flights to become unfeasible.

Malaysian Airlines has cut its capacity and Malindo Air has reduced its domestic Ismail Ali – Paragon of Trust and Integrity” memoir here yesterday.

Nor Shamsiah said trust between central bankers was formed out of reliability, stemming from competency which was practised since the central bank was first set up.

“As the first Malaysian Governor of Bank Negara, Tun Ismail Ali had planted the principles that now run deep within the bank and gave us the vision to soar towards,” she said.

Not only does a central bank need to be careful custodians of monetary policy and an able adviser to the government, Nor Shamsiah said, Bank Negara also needed to be seen and recognised as the competent authority to discharge these roles.

Meanwhile, Ismail’s memoir, which was produced by Bank Negara and launched by commitment to harness the spirit of trust and cooperation among the regional and international central banking community, amidst the rising crescendo of challenges confronting the global economy and financial system.

She said that Ismail sowed the seeds for collaboration, such as through the establishment of the South East Asian Central Banks Centre.

“He strove for perfection, yet he understood that neither economic assumption, ceteris paribus (all other things being equal) nor econometric models can accurately predict this world.

“He said the central bank works in an uncertain world, with policy tools that are often not easily understood, and seek to meet objectives of policy that are always broadly defined,” she added. — Bernama