KUALA LUMPUR, July 4 — OCBC Bank expects Bank Negara Malaysia (BNM) to keep its overnight policy rate (OPR) unchanged at three per cent at the Monetary Policy Committee (MPC) meeting on Thursday (July 6), amid slowing growth momentum and easing inflationary pressures.
In a research note today, the bank said the view is premised on weaker incoming activity data since May 3, in which BNM surprised with a 25-basis points (bps) hike, pointing to slower growth momentum in the second quarter of 2023 (2Q 2023) alongside easing inflationary pressures.
“To that end, we assign a 70 per cent probability to BNM maintaining its policy rate on July 6 and a 30 per cent probability to a second consecutive 25 bps hike,” it said, adding there are some factors that weighed in favour of an incremental hike.
OCBC said core inflation eased to a lesser extent compared to headline inflation but the direction implied that inflationary pressures are easing.
“The bigger impact on inflation may be from targeted fuel subsidies which are still under discussion.
“That said, the risk of additional tightening will rise more noticeably, in our view, if inflationary pressures build from the implementation of targeted fuel subsidies,” it added.
— Bernama
