Bank Negara Malaysia (BNM) is expected to keep the overnight policy rate (OPR) at 3.00 per cent for the remainder of the year.
Hong Leong Investment Bank (HLIB) noted that the MPC said the current stance of monetary policy remains supportive of the economy and is consistent with the current assessment of inflation and growth.
The last and sixth MPC meeting of the year will be convened on November 1 and 2.
Public Investment Bank Bhd is of the view that the current rate allows BNM to carefully evaluate the impact of its cumulative 125 basis points (bps) rate hikes since the beginning of their rate hike cycle in May 2022, while exercising prudence.
It reckons that the escalating global uncertainties and high base effects would present formidable challenges to sustaining economic momentum in the coming quarters.
“Nonetheless, should the domestic economy outperform expectations, we believe that BNM may consider the gradual normalisation of the Statutory Reserve Requirement (SRR) to 3.00 per cent in the third quarter of 2024 (3Q 2024),” it added.
CGS-CIMB Securities Sdn Bhd reckons that global conditions over the next quarter or two would likely remain weak as the United States (US) maintains its elevated federal funds rate as it favours dampening inflation over economic growth.
Furthermore, China is still dealing with considerable growth challenges owing to weak business and consumer confidence amid uncertain economic and political conditions, ongoing problems in the real estate industry, as well as limited fiscal space for massive and effective support, it noted.
“Following this, the onus of Malaysia’s economic growth will lie further on the domestic economy, in which the catalysts remain limited to the tourism sector and strong labour market.
“For exporters, the impact of a weak ringgit might be limited as global demand would probably recover later in the year,” it said.
The brokerage expects the OPR to be kept unchanged at the current level for the remainder of the year and throughout 2024. ― BERNAMA
