OPR to be cut within next 2 meetings, say analysts

KUALA LUMPUR: Bank Negara Malaysia may cut its Overnight Policy Rate (OPR) in the next two meetings after having kept the rate steady at its second policy meeting of the year.

The move to leave the OPR unchanged at 3.25 per cent during the latest Monetary Policy Meeting was consistent with the markets’ expectations.

The central bank acknowledged that downside risks from unresolved trade tensions, heightened uncertainties global and domestically, and prolonged weakness in commodity-related sectors could weigh on domestic growth, although the baseline forecast appeared to remain on a steady growth path.

AmBank group chief economist and head of research Dr Anthony Dass said there could be a rate cut in July after taking into account recent evidences of the macro figures that revealed a weak trend.

“With Bank Negara having acknowledged the downside risks in the economic and financial environment, and the need to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation, it supports our view for a rate cut to most likely take place during the July 9 meeting, rather than the May 7 meeting, by 25 basis points,” he said.

Public Investment Bank Bhd said a four per cent and below or six per cent and above in Malaysia’s growth prospects could be the immediate trigger points for a change in the policy rate.

“The central bank may review the policy rate should there be a rise in financial imbalance risks but that prospects appear muted at this juncture due to the limited upside in equity market and housing prices,” it said.

PublicInvest said the OPR might remain steady this year unless there was a change in growth dynamics.