PETALING JAYA: Bank Negara Malaysia (BNM) is expected to keep the overnight policy rate (OPR) unchanged at 3% at the upcoming monetary policy meeting on May 9, according to Standard Chartered Global Research (StanChart).
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.
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.
