KUALA LUMPUR, March 7 — Bank Negara Malaysia (BNM) is expected to keep the overnight policy rate (OPR) unchanged at 2.75 per cent in the upcoming Monetary Policy Committee (MPC) meeting on Thursday, said Standard Chartered Bank (Singapore) Ltd.
In a global research note today, the bank said that with subsidies still in place, January inflation moderating slightly, and with only one month of data since the January pause, BNM is likely to maintain its wait-and-see stance to assess the impact of cumulative past OPR adjustments.
However, it noted that while BNM paused the rate hike in January, the tone of the accompanying monetary policy statement was not dovish, and the central bank had a positive assessment of the domestic economy and left the window open to further hikes.
“We will watch for how BNM’s assessment of the domestic growth and inflation outlook has evolved over the past month,” it said.
Hence, Standard Chartered maintained its call for BNM to hike the OPR pre-emptively by 25 basis points (bps) to three per cent in May, ahead of a potential fuel subsidy rationalisation in the second half of 2023, which may exclude the top 20 per cent (T20) income group from fuel subsidy.
“At the Ministry of Finance’s US$80 per barrel oil price assumption, we estimate that removal of the fuel subsidy for the T20 income group will add a 0.5 percentage point to inflation annually,” it added.
— Bernama
