KUALA LUMPUR - CIMB Investment Bank Bhd (CIMB) expects Bank Negara Malaysia (BNM) to maintain the Overnight Policy Rate (OPR) at its current level until the end of 2025.
In its research note, CIMB stated that the Monetary Policy Committee (MPC) remained sanguine about Malaysia’s growth outlook, particularly regarding exports and investment.
It said the MPC has maintained its data-dependent approach, acknowledging that inflation risks remain tilted to the upside and will be influenced by forthcoming domestic policy measures.
On Thursday, the MPC kept the OPR at 3.00 per cent for the eighth consecutive meeting.
The current monetary policy stance is neutral, supported by robust economic growth, a stable inflation trajectory, and a stronger ringgit.
Meanwhile, Public Investment Bank Bhd (PIVB) has revised its full-year inflation forecast down to 2.0 per cent, reflecting an average Consumer Price Index (CPI) of just 1.8 per cent over the first seven months.
It said this adjustment accounts for minimal inflationary impact from the services tax adjustment, diesel subsidy rationalisation, and a delayed reform of the RON95 subsidy.
The forecast is now at the lower end of the official 2.0 per cent to 3.5 per cent target range.
PIVB also emphasised the importance of a phased approach to RON95 subsidy rationalisation to avoid sudden inflationary shocks, given its 5.0 per cent weighting in the CPI basket.
"If implemented in the fourth quarter of 2024, we expect CPI to remain within the official target range.
"Furthermore, BNM’s neutral stance in the latest Monetary Policy Statement, alongside ongoing risks, reinforces our view that the OPR will likely stay at 3.00 per cent throughout 2024," PIVB said.
Maybank Investment Bank Bhd (Maybank) also maintains its forecast of the OPR remaining at 3.00 per cent for the year.
It cites a pick-up in growth this year, expected sustained momentum next year, and inflation risks in 2025 (forecasted at 2.5 per cent) related to the RON95 petrol subsidy rationalisation.
Maybank noted that a stable OPR in the near term, combined with anticipated US interest rate cuts starting in September 2024, is positive for the ringgit.
It highlighted that past instances of US Federal Reserve interest rate cuts and progress in domestic economic reforms had led to a positive ringgit outcome, supported by net inflows of foreign funds into local equity and bond markets due to investor confidence and risk-on sentiment. - BERNAMA