Standard Chartered expects Bank Negara to hold OPR at 2.75%

KUALA LUMPUR: Bank Negara Malaysia (Picture) is expected to keep the overnight rate (OPR) unchanged at 2.75% at Thursday’s Monetary Policy Committee (MPC) meeting, Standard Chartered Bank (Singapore) Ltd said.

In a global research note today, the bank said that with subsidies still in place, moderating January inflation and data from just one month since the January break, BNM is likely to maintain its wait-and-see stance to assess the impact of accumulated past OPR adjustments.

However, it noted that while BNM paused rate hikes in January, the tone of the accompanying monetary policy statement was not dovish and the central bank was positive on the domestic economy, leaving the window open for more rate hikes.

“We will monitor how BNM’s assessment of domestic growth and the inflation outlook has evolved over the past month,” it said.

As a result, Standard Chartered maintained its call for BNM to preemptively raise the OPR by 25 basis points (bps) to 3% in May, ahead of a possible rationalization of fuel subsidies in the second half of 2023 that could shut out the top 20%. (T20) Income bracket from fuel subsidies.

“Given the Treasury Department’s oil price assumption of $80 a barrel, we estimate that removing fuel subsidies for the T20 earner will add 0.5 percentage point to inflation annually,” she added. – Bernama