UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting review the latest interest rate decision by the BNM.
Key Takeaways
“Bank Negara Malaysia (BNM) continued to leave the Overnight Policy Rate (OPR) unchanged for the 10th straight meeting at 1.75% on (3 Mar). This decision was widely expected by us and markets. The Monetary Policy Committee (MPC) will next meet on 10-11 May.”
“There was little change in (the) accompanying statement, except for the acknowledgement of the military conflict in Ukraine emerging as a new key risk to global growth and trade outlook, commodity prices and financial market conditions. BNM maintained its optimism about the domestic growth recovery, and moderate inflation outlook amid lingering risks from volatile commodity prices and prolonged supply-related disruptions.”
“Overall, the central bank kept a wait-and-see approach to assess the impact of Russia-Ukraine conflict and other prevailing risk events on the domestic growth and inflation outlook before adjusting its monetary policy stance. We think that improving domestic growth momentum, further signs of second round effects on inflation, and normalisation of global monetary policy justifies an OPR hike as early as in 2Q22. Thereafter, a successful transition into an endemic phase and a possible easing of geopolitical risks could provide ammunition for further monetary policy normalisation in 3Q22, bringing the OPR to 2.25% by end-2022.”
