KUALA LUMPUR – Standard Chartered Global Research expects Bank Negara Malaysia (BNM) to keep the overnight policy rate (OPR) unchanged at 3% in 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% 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%of GDP) of withdrawals – will likely add to demand-driven inflation.
“Second, civil service salaries (circa 10% of total employed) may be raised by more than 13% 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. – May 7, 2024