“Despite external risks, BNM remains upbeat on domestic demand, supported by a strong labour market, policy measures, and sustained investment from infrastructure and development initiatives,” RHB Investment Bank said.
The group said Bank Negara Malaysia’s recent 25-basis-point cut in the overnight policy rate is anticipated to create a more supportive environment for homebuyers and investors by reducing borrowing costs and improving housing affordability.
“I think the central bank wants to wait and see whether the July rate cut will support economic growth.
About half of 23 economists polled predict a cut from 3%, while the rest expect the central bank to stand pat.
"If the Fed stays on hold for longer, or the unwinding of fuel subsidies sends inflation too high, BNM may be content to keep the OPR at 3%.
Malaysia’s economy may expand 4%-5% this year, according to government forecast, following a weaker-than-expected 3.
Bank Negara Malaysia resisted pressures to raise the overnight policy rate last November, and “we expect the same this week”, HSBC said.
Whether correctly or incorrectly, Malaysia’s current “supportive monetary policy” may be construed as “accommodative or dovish,” especially in relation to higher interest rates in several other economies.
The last time Bank Negara Malaysia raised the OPR was in May, instituting a 25 bps hike to 3%, from 2.
Bank Negara is scheduled to hold its sixth and final Monetary Policy Committee meeting for 2023 on Nov 1 and 2.
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