BNM kept its policy rate unchanged at 3.00%, in line with expectations said OCBC, the Central Bank noted today that there has been some significant changes in global markets since its previous meeting on 7 March and these were acknowledged in its official policy statement.
OCBC Senior Asean analysts commented that BNM had noted on the global front that economic growth is likely to be sustained and that the pace of “disinflation has slowed in advanced economies”. It added that “this increases prospects of interest rates remaining high for longer, particularly in the US.” BNM’s assessment remained that risks to global growth were skewed to the downside.
With regards to domestic growth prospects and BNM noted that “the recovery in exports is expected to gather momentum supported by the global tech upcycle and continued strength in non-electrical and electronics goods.” In view of this OCBC said its GDP growth forecast for 2024 is 4.2% versus 3.7% in 2023, which it said is within BNM’s 4-5% forecast range.
BNM noted that its 2024 headline and core inflation forecast ranges of 2.0% – 3.5% and 2.0% – 3.0%, respectively, incorporates the “potential impact of subsidy rationalisation.” Here the bank said its headline inflation forecast of 2.5% is within this range and suggests that inflationary pressures are likely to remain well contained.
The bottom-line OCBC said is that BNM remains comfortable with current monetary policy settings, as growth is expected to improve with inflationary pressures manageable. Highlighting what BNM said which is to “manage risks arising from heightened financial market volatility” with regard to the currency. As such, OCBC said it continues to expect BNM to keep its policy rate unchanged at 3.00% in 2024.
