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- StanChart chief economist Edward Lee and economist Jonathan Koh said this would mark BNM’s fourth consecutive 25bps hike in the OPR since May this year, from a record low of 1.75%.
KUALA LUMPUR (Nov 2): Ahead of the conclusion of Bank Negara Malaysia’s (BNM) monetary policy committee (MPC) meeting in November, Standard Chartered (StanChart) said it expects the central bank to announce a 25 basis point (bps) hike in the overnight policy rate (OPR) on Thursday (Nov 3), raising it to 2.75%.
In a note on Wednesday (Nov 2), StanChart chief economist Edward Lee and economist Jonathan Koh said this would mark BNM’s fourth consecutive 25bps hike in the OPR since May this year, from a record low of 1.75%.
However, the pair suggested that a pause on interest rate hikes may be on the cards in view of BNM noting that the MPC is not on any “pre-set course”.
“In its previous policy statement, BNM continued to assess its stance as ‘accommodative and supportive’ of economic growth. We read this as meaning that BNM is still looking to remove further accommodation.
“However, the central bank also noted that the committee is not on any ‘pre-set course’; this suggests that a pause may be coming soon, in our view,” they said.
The StanChart economists noted that the 25bps hike may push BNM to sound more neutral on monetary policy, but added that they do not expect the central bank to provide a clear signal on whether it will put a pause on interest rate hikes.
“BNM may sound even more neutral at the upcoming meeting, given that it will have delivered 100bps rate hikes (assuming a 25bps move in November).
“However, given the strong growth recovery and simmering (albeit not yet threatening) inflation, we do not expect BNM to send a clear signal that it will stop after the November hike, and it may turn more data-dependent going forward," they said.
Malaysia’s headline inflation, gauged via the consumer price index, eased to 4.5% year-on-year in September, as compared to 4.7% in August 2022, marking an end to six months of consecutive increases. Core inflation clocked in at 4% in September, as compared to 3.8% in August.
The central bank’s MPC is currently sitting for its final meeting of the year which is slated to conclude on Thursday, with a monetary policy statement expected to follow at 3pm.
StanChart’s forecast for a 25bps hike to the OPR in November lines up with economists’ median estimates, according to Bloomberg.
