Standard Chartered Global Research stated that Bank Negara Malaysia (BNM) is likely to maintain the overnight policy rate (OPR) tomorrow (Mac 7) amid moderating growth and inflation.
The research house said BNM is unlikely to hike the OPR, which is anticipated to stay at 3.0 per cent, primarily to support the ringgit as the current rate is not seen as affecting the growth and inflation outlook.
“The ringgit has had some reprieve since the start of March after underperforming in the first two months of 2024.The ringgit’s weakness likely limits BNM’s room to cut rates to support growth,” it said in a research note today (Mac 6).
On BNM’s Financial Markets Committee’s recent statement, the research unit said the coordination with government-linked companies and investment companies is likely preferred over a tweak to monetary policy by BNM to address foreign exchange weakness.
“Growth is currently soft in Malaysia, the economy ended 2023 on a soft note, with the fourth quarter gross domestic product (GDP) contracting 2.1 per cent quarter-on-quarter. Core inflation also eased further to 1.8 per cent year-on-year in January, although upcoming changes to administrative taxes and subsidy rationalisation could add to inflation,” it added.
BNM will announce its monetary policy decision on Thursday.
