OCBC Bank sees 'increasing chance' BNM will cut OPR by 25 bps

KUALA LUMPUR (July 2): OCBC Bank said the likelihood that Bank Negara Malaysia (BNM) will lower its Overnight Policy Rate (OPR) by 25 basis points (bps) in the next Monetary Policy Committee (MPC) meeting, scheduled on July 8, has increased.

Its economist Wellian Wiranto said that in the previous meeting in May, the MPC could still project a sanguine outlook because business activities were largely unfettered by the lockdown then.

"With one tighter set of restrictions now being piled on top of already tightened measures, that assumption is sadly looking less tenable by the day.

"Overall, we see an increasing chance for BNM to cut the rate by 25 bps on July 8," he said in a research note today.

Wiranto noted that the enforcement of the Enhanced Movement Control Order (EMCO) in selected areas in Selangor and Kuala Lumpur from July 3 to 16, 2021 signalled that the country might have to wait a while longer to see restrictions easing.

He said the idea of reopening economic activities by mid-July would likely not happen at the moment.

"In the meantime, the economic hits might be felt more acutely, even if the latest stimulus helps in some ways," he added.

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