MIDF: OPR Remains At 3 Pct This Year As The Current Setting Continues To Support Sustainable Economic Growth

KUALA LUMPUR, Jan 22 (Bernama) -- Bank Negara Malaysia (BNM) has kept the overnight policy rate (OPR) at 3.00 per cent this year as the current setting remains accommodative to sustainable economic growth, said MIDF Amanah Investment Bank Bhd (MIDF). 

In its research note, it said Malaysia’s economy is expected to continue growing, underpinned by both increases in domestic and external demand. 

"While we forecast inflation will accelerate this year due to changes on the supply side, for example,  policy changes and higher costs, we do not expect any change to the OPR because underlying price pressures will likely remain under control. 

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"Nevertheless, BNM has sufficient policy flexibility to adjust monetary policy to counter future economic uncertainties, mainly subject to changes in domestic economic conditions and inflation outlook in Malaysia," said MIDF. 

The Monetary Policy Committee (MPC) of BNM decided to maintain the OPR at three per cent at its meeting today, emphasising that the current policy stance remained conducive to sustained economic growth. 

The central bank is optimistic about the global trade resilience, bolstered by the ongoing upcycle in the technology sector.

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However, BNM noted tighter trade and investment restrictions could cloud the outlook and heightened policy uncertainties may also contribute to increased volatility in the global financial markets. 

"We share a similar view, as the market sentiment has been showing signs of concerns on the potential trade disruptions under the new United States administration," said MIDF. 

The research firm said the implementation of additional domestic policy measures such as targeted subsidies, higher taxes, and higher minimum wages, would play a crucial role in shaping the inflation outlook. 

Inflationary upside risks would be influenced by the spillover effects of domestic policy measures, along with fluctuations in global commodity prices and financial market developments.

MIDF also said despite potential fluctuations arising from global policy uncertainty, the fundamental underpinnings of Malaysia's economic framework present a robust foundation for the ringgit. 

BNM foresees the nation's strategic economic positioning, characterised by proactive structural reforms and deliberate policy interventions, establishing a resilient backdrop for currency stability. 

"Ongoing governmental initiatives designed to stimulate financial flows and enhance investor confidence are instrumental to supporting the ringgit's long-term prospects," MIDF added. 

Meanwhile, RHB Investment Bank Bhd reiterated that the OPR remained at 3.00 per cent due to steady economic prospects and manageable inflation pressures.

In a note today, it said that in its view, three key factors will drive OPR behaviour.

Firstly, Malaysia's economic momentum, with growth expected to expand by 5.0 per cent in 2025; secondly, the inflation trajectory, with the headline consumer price index (CPI) projected to rise by 2.4 per cent in 2025 (within the official range of 2.0 per cent-3.5 per cent); and thirdly, to a lesser extent, the behaviour of global rates in the foreseeable future.

-- BERNAMA