KUALA LUMPUR: Bank Negara Malaysia is likely to keep its overnight policy rate (OPR) unchanged at 1.75 per cent for most part of 2022, Maybank Investment Bank Bhd (Maybank IB) said.
Maybank IB chief analyst Suhaimi Ilias said the OPR would likely continue to stay at a record-low of 1.75 per cent before a 25 basis point (bps) hike to 2.00 per cent in the fourth quarter (Q4) of the year.
"The 2022 Budget remains expansionary with the third consecutive year of budget deficit at more than six per cent of gross domestic product (GDP). But we see broad policy normalisation kicking in after 2022, with a 50bps hike in OPR in 2023 and medium-term fiscal consolidation emerging to bring the budget deficit to below 5 per cent of GDP in 2023 and to 3.0 to 3.5 per cent by 2025," Suhaimi said at Maybank IB's 2022 Asean Macro and Malaysia Outlook webinar today.
On the local currency outlook, Maybank IB head of FX research and strategy for global markets Saktiandi Supaat said the ringgit was expected to be at around 4.18 versus the US dollar for most part of the first half of 2022 before settling the year at RM4.10.
This would be supported by resilient oil prices and economic rebound, but the rising US Treasury yields, if it continued to do so, might limit the gains, he added.
"We maintain a mildly positive outlook for the ringgit relative to the US dollar from around the middle of 2022, with support largely from external factors - global economic recovery, an eventual mildly softer greenback environment, oil price and renminbi stability," he said.
On the domestic front, Saktiandi said the local currency might be supported by the government's move to an endemic scenario as vaccine progress improves.
"For 2023, we are forecasting the ringgit to appreciate slightly to 4.05 level by the end of the year," he added.