StanChart: BNM will likely keep OPR at 1.75% at September meeting

KUALA LUMPUR (Sept 8): Bank Negara Malaysia (BNM) will likely keep the overnight policy rate unchanged at 1.75 per cent at its upcoming Monetary Policy Committee (MPC) meeting scheduled for Sept 10, as it waits to take stock and assess the need for further cuts, said Standard Chartered Bank (StanChart)

The central bank has already delivered a cumulative 125 basis points (bps) of cuts at the last four meetings, taking the key policy rate below the low of 2.0 per cent set during the global financial crisis (GFC).

In a note, StanChart said BNM would take a pause as it has already cut rates to a historical low.

It said the global economies, including Malaysia, are reopening and higher-frequency data show a clear pick-up in activity, while economic data projections remain uncertain due to lockdown disruptions.

“With some pandemic restrictions still in place, further rate cuts might have only a limited marginal impact and reduce future policy space.

“We believe the central bank has room to adopt a wait-and-see stance. If a recurrence of infections threatens the recent recovery in activity (global or local) or if the implementation of fiscal measures is weak, BNM could cut policy rates further,” it added.

The September meeting will be MPC’s second last meeting for 2020 before holding the last one on Nov 3.

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