BNM expected to maintain OPR at current level - Juwai IQI

KUALA LUMPUR - Bank Negara Malaysia (BNM) is expected to keep the overnight policy rate (OPR) unchanged at 3.0 per cent in its upcoming sixth and final Monetary Policy Statement of 2023 on Thursday, Nov 2, to avoid surprising the market or squeezing the economy.

Juwai IQI co-founder and group chief executive officer Kashif Ansari said all indicators suggest that the country does not need higher OPR rates at the moment, while inflation is under control and economic growth has cooled.

"Because the bank was one of the first in the world to start raising rates in this cycle, Malaysia was able to beat inflation without a recession. That has been good for the housing market.

"The housing and financial markets like when rates fall, but they do not like surprises, and a decision not to adjust the rate has been widely expected,” he said in a statement today.

However, Kashif said that some have called for the central bank to increase the OPR to help stem the ringgit’s fall as the local currency has fallen low against the US Dollar.

"Interest rates are lower in Malaysia than in the United States, so many investors are moving their money to the US for higher returns on cash and bonds. By increasing the OPR, the bank would hope to help the ringgit regain some of its value. BNM may yet do this in 2024.

"Strong household finances and strong employment are two of the indicators we look at to evaluate how housing demand is likely to trend. Both are in good shape,” he said.

Kashif said the central bank’s decision to leave the OPR unchanged this month will help sustain current economic growth and help more people buy their own homes, which is the key to economic security.

"In 2024, if the US Federal Reserve continues to maintain its ‘higher for longer’ interest rate regime, BNM will come under more pressure to raise rates and stem the ringgit’s fall,” he said. - BERNAMA