Julia Goh, Senior Economist of UOB Group, and Loke Siew Ting, Economist, analyze the latest BNM event.
“Bank Negara Malaysia (BNM) kept the overnight policy rate (OPR, at 1.75 percent) unchanged for the sixth consecutive meeting today, as predicted (8 Jul). In the face of continuing downside risks to the growth outlook, it underlined that the present interest rate is reasonable and accommodative.”
“With excellent progress on the national vaccination campaign and further recovery in the global economy, BNM expects that all fiscal and financial measures announced to date will continue to soften the impact of the harsher statewide lockdown implemented since mid-May on the economy. With downside risks to the near-term growth outlook linked to the severity and duration of containment measures, BNM also pointed out that greater adaptation to remote work, automation, and digitalisation will help to reduce the impact of restrictions. The central bank is also perceived as being less concerned about short-term inflationary pressures, which it expects to subside as the base impact fades.”
“Overall, BNM continues to leave the door open, stating that given the pandemic’s uncertainties, the future stance of monetary policy will be data dependent. However, given the Fed’s hawkish shift, other central banks’ preparedness to normalize their monetary policy, and global inflation continuing to rise, we believe there is little potential for further monetary policy easing. There is also a significant amount of stimulus money available to spend before the end of the year. We continue to believe that the OPR will remain at 1.75 percent for the balance of the year “e calendar year.”/n
