OPR Kept at 3.00% While BNM Expects Higher Inflation Trend in 2HCY24

OPR remains status quo as predicted. BNM kept the Overnight Policy Rate at 3.00% following its fourth Monetary Policy Committee meeting in 2024, aligning with our predictions and market consensus.

According to the recent Monetary Policy Statement (MPS), the global economic expansion is expected to continue, driven by resilient labour markets and recovery in global trade.

Sustained strength of Malaysia’s GDP in 2QCY24. BNM notes an uptick in Malaysia’s economic activity in 2QCY24, underpinned by resilient domestic expenditure and improving export performance.

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OPR Kept at 3.00%

The ongoing long-term projects and implementation of catalytic initiatives under the national master plans are bolstering investment activity, while continued employment and wage growth support robust household spending.

BNM projects higher inflation trend in 2HCY24. BNM expects inflation to trend higher in 2HCY24 following the recent rationalisation of diesel subsidies. However, the increase in price pressure remains manageable thanks to mitigation measures to minimise cost impact on businesses.

The inflation outlook hinges on domestic policy adjustments, notably subsidies and price controls. BNM maintains its inflation forecast, projecting headline and core inflation to average in the range of 2.0% – 3.5% and 2.0.