BNM keeps OPR at 3%, sees inflation moderating in 2H
This is the third consecutive time that the OPR has been at 3%.
This is the third consecutive time that the OPR has been at 3%.
“I am cautiously optimistic on the Malaysia property market going forward in the short-term perspective.
MIDF Research, however, thinks that the steady domestic demand and sticky core inflation that lingered above 3% — as opposed to the pre-pandemic average of 1.
The research house’s view contradicts OCBC’s and UOB’s view that BNM will hold the OPR at 3% for the rest of the year, but aligns with MIDF Research's view that an increment will occur in the second half of the year.
Domestically, the central bank noted that following its strong outturn in the first quarter of the year, the local economy has since expanded at a more moderate pace as exports were weighed down by slower external demand in line with expectations.
BNM’s latest OPR decision follows the 25 basis point (bps) hike in May as it moved to further normalise monetary policy in line with resilient domestic growth prospects.
“Core inflation eased to a lesser extent compared to headline inflation but the direction implies that inflationary pressures are easing.
According to Hong Leong Investment Bank (HLIB), banks, in particular Alliance Bank Malaysia Bhd and Bank Islam Malaysia Bhd (BIMB), are expected to benefit from the OPR hike as it would help alleviate some pressure off Net interest margins (NIM) in 2Q2023.
In a report on Thursday (May 4), BMI, a Fitch Solutions company, said that as inflation continues to moderate domestically, "we believe BNM will increasingly turn its focus to supporting growth over the coming months".
The majority of economists now bet that the OPR, which has normalised to pre-pandemic levels, will be maintained for the remaining three monetary policy meetings in 2023, scheduled in July, September and November.