BNM likely to keep OPR unchanged at three per cent
Inflation remained benign as of March, despite a two percentage point increase in the services tax.
KUALA LUMPUR - Standard Chartered Global Research expects Bank Negara Malaysia (BNM) to keep the overnight policy rate (OPR) unchanged at three per cent at the upcoming monetary policy meeting on May 9.
The research firm said it will watch for any tweaks to the central bank’s inflation outlook to assess the possibility of a hike in late 2024.
"The first quarter gross domestic product (GDP) growth was resilient at 3.9 per cent year-on-year but was lower than we had anticipated as of end-2023.
"Inflation remained benign as of March, despite a two percentage point increase in the services tax, suggesting limited pass-through; this reflects subdued core inflation,” it said in a research note today.
It said recent developments, however, may have increased the possibility of a hike in late 2024.
"First, the restructuring of the Employees’ Provident Fund accounts - which could lead to an estimated RM25 billion (circa 1.3 per cent of GDP) of withdrawals - will likely add to demand-driven inflation.
"Second, civil service salaries (circa 10 per cent of total employed) may be raised by more than 13 per cent from December, and third, fuel subsidy rationalisation (a well-flagged factor) may be implemented in 2025 or earlier, adding to an upside risk,” it added. - BERNAMA