Analysts predict Bank Negara may increase OPR to 3.25 pct in 2018

KUALA LUMPUR: Bank Negara Malaysia ( BNM) is likely to increase its overnight policy rate (OPR) by 25 basis points to 3.25 per cent next year as major global central banks are stepping up talks to tighten monetary policies and the Malaysian economic growth is projected to improve further.

“We think the monetary policy stance would be tilted towards the upside in 2018,” said RHB Research Institute in a research note yesterday.

However, for this year, the research firm bel ieved the central bank would keep its OPR unchanged at three per cent as economic growth was projected to moderate while inflation was expected to ease in the second half of 2017 (2H17).

“Looking ahead, we envisage the headline inflation rate to ease to 2.8 per cent year- on-year (y- o-y) in 2H17 amid lower fuel prices and a waning low base effect.

“However, for the full year, we expect headline inflation to pick up to 3.5 per cent in 2017 from 2.1 per cent in 2016,” it said.

The higher projected annual inflation rate is on account of generally higher fuel prices compared to last year, the removal of subsidies on selected administered goods, higher business costs and the weak ringgit, translating into higher import prices, it said.

Meanwhi le, the headl ine inflation rate slowed further to 3.2 per cent y- o-y in July 2017, from 3.6 per cent in June and compared to 3.9 per cent in May, mainly due to a slowdown in transportation cost amid lower fuel prices during the month. — Bernama