KUALA LUMPUR: Maybank Investment Bank Bhd (Maybank IB) expects another 25 basis points (bps) hike in the overnight policy rate (OPR) to 3.00 per cent at the first Bank Negara Malaysia (BNM) monetary policy committee (MPC) meeting on Jan 18-19, 2023.
Maybank IB noted that the OPR had risen 100 bps to 2.75 per cent in 2022.
"The monetary policy statement (MPS) reiterated that the monetary policy stance is still accommodative, not on any pre-set course, data-dependent and monetary policy adjustment will remain measured and gradual.
"To note, BNM has tolerated periods of negative real OPR and negative differentials between OPR and the US Federal Reserve’s (Fed) funds rate in the past," the research firm said in a note today.
Maybank IB noted that BNM has maintained the view of a global economy facing headwinds and downside risks from elevated and persistent inflation, tighter financial conditions, and China’s macro uncertainties and fallouts from geopolitical tension.
This is compared with relatively better domestic economic conditions and outlook driven by domestic demand, and improving labour market and income.
"Slower external demand and financial and foreign exchange market volatilities are not expected to derail Malaysia’s growth.
"Downside risk to domestic growth outlook include weaker-than-expected global growth; higher risk aversion in global financial markets amid more aggressive monetary policy tightening in major economies; further escalation of geopolitical conflicts and worsening supply chain disruptions," it added.
The research house said in the current context of BNM’s current OPR hike cycle - the fourth successive 25 bps hike in the OPR at the final MPC meeting of this year - and a little over two weeks before the polling date of the 15th General Election (GE15) - underscored BNM’s independence in its monetary policy decisions. - Bernama
