KUALA LUMPUR: Analysts are unanimous in their view that Bank Negara Malaysia (BNM) will maintain the overnight policy rate (OPR) at the current level of three per cent throughout the rest of 2023.
"At current OPR level, the monetary policy stance is slightly accommodative thus remains supportive of the economy.
"Bank Negara's Monetary Policy Committee (MPC) sees limited risk of future financial imbalances, compared with previous statement about needing to ensure monetary policy stance is appropriate to prevent the risk of future financial imbalances. "Taken together with the above cautiously constructive view on growth and inflation, OPR is expected to remain at three per cent for the rest of the year," Maybank Investment Bank Bhd (Maybank IB) said in a note today.
Public Investment Bank Bhd (PublicInvest) also maintained that Bank Negara will maintain its current monetary policy stance for the remainder of the year.
It expects BNM to adopt a cautious approach, closely monitoring significant developments in central bank policies.
"In the event that Malaysia's domestic economy exceeds expectations, it is not implausible for Bank Negara to consider optimising its monetary tools by gradually normalising the statutory reserve requirement (SRR) to three per cent in 1H24," it said in a note.
However, PublicInvest noted that any changes to the current monetary policy stance will thus be subjected to rigorous evaluation based on further improvements in macroeconomic conditions.
This is particularly true with the ongoing recovery of the labour market and a sustained expansion of domestic demand and pace of inflationary pressures.
Echoing similar views, Hong Leong Investment Bank (HLIB Research) said Bank Negara will keep OPR unchanged at three per cent until year-end, as growth and inflation are expected to weaken further in the second half of 2023 (2H23). It said the MPC sees limited risks of future financial imbalances.
Similarly, UOB Global Economics and Market Research also viewed that OPR will remain at three per cent for the rest of the year. It said this is despite a higher Fed funds terminal rate and ringgit pressure complicates the OPR outlook.
"We think that moderating inflation trends and growth uncertainties take precedence at this point," it added.