CIMB Treasury And Markets Research Expects BNM To Hold OPR At 2.75 Pct At March 5 MPC Meeting

KUALA LUMPUR, Feb 27 (Bernama) -- CIMB Treasury and Markets Research expects Bank Negara Malaysia (BNM) to maintain the overnight policy rate (OPR) at 2.75 per cent at the next Monetary Policy Committee (MPC) meeting on March 5, amid renewed uncertainty over the United States tariff rates.

In a research note, it said the uncertainties reinforce the central bank’s decision to maintain last year’s pre-emptive cut as any potential boost to growth from lower effective tariffs, even at 10 per cent, is likely offset by downside risks from heightened trade policy uncertainty, possible substitution effects from China’s larger tariff reductions, and tail risks from higher Section 232 tariffs.

“The new Section 122 tariff has taken effect at 10 per cent, with the Trump administration preparing to raise rates to the 15 per cent ceiling, ‘where appropriate’, likely as leverage to push countries towards new trade negotiations and to expedite ratification of agreed deals (including with Malaysia),” it said.

On growth, the research house maintained its 2026 gross domestic product (GDP) forecast at 4.5 per cent, reflecting balanced risks from the new tariff regime, including the potential threat of Section 232 tariffs.

“Despite the lower effective tariff rate, our 2026 GDP growth forecast of 4.5 per cent remains intact, reflecting balanced risks from the new tariff regime, including the potential threat of Section 232 tariffs,” said CIMB Treasury and Markets Research.

It noted that beyond Malaysia’s four to five per cent export exposure to US semiconductor demand, affected goods under potential Section 232 measures could add another one per cent, posing meaningful downside risks to growth and further diminishing the likelihood of a rate hike this year.

Meanwhile, headline and core inflation were unchanged in January 2026 at 1.6 per cent and 2.3 per cent year-on-year, respectively and among the major contributors, housing and utilities, and miscellaneous goods and services saw an uptick in inflation, while transport recorded a decrease due to lower fuel and goods transport prices.

“The increases in housing & utilities and miscellaneous goods & services were offset by the decrease in transport, resulting in unchanged headline inflation as contributions from the other components remained stable,” it said.

CIMB Treasury and Markets Research highlighted that the rise in the housing and utilities index was mainly driven by a 10.2 per cent increase in sewerage collection charges, reflecting the final stage of staggered tariff adjustments since 2022.

Looking ahead, it said the housing and utilities’ contribution to inflation is estimated to rise five basis points in February and March, owing to a smaller automatic fuel adjustment reduction in electricity tariffs.

The faster increase in miscellaneous goods and services, it said, was largely due to the jewellery and watches component that recorded a sharp rise in inflation since the fourth quarter of 2025, in line with higher gold prices.

It said that the estimation of ex-gold core inflation had slightly declined in January 2026, indicating limited signs of underlying price pressures.

-- BERNAMA