OPR Left Unchanged at 3.00% as Inflation Moderated

OPR kept at 3.00%. BNM maintained the Overnight Policy Rate (OPR) at 3.00%, in its fifth Monetary Policy Meeting of 2023, which is in line with market expectations.

In the Monetary Policy Statement, BNM highlighted that the global economy remains expanding underpin by resilient domestic demand amid strong labour market conditions. China’s recovery still weaker than expected.

BNM foresee domestic demand to remain on expansionary while external front continues to be in challenging environment.

Household spending to stay on expansionary momentum, supported by improving labour market conditions and steady income growth. BNM also highlighted investment prospects to be supported by the realisation of multi-year and infra projects, further pick-up in tourism-related activities and implementation of catalytic initiatives as announced in master plans such as Madani Economic Framework, New Energy Transition Roadmap (NETR) and New Industrial Master Plan 2030 (NIMP 2030).

OPR to remain status quo until year-end following external demand weakness. The current focus of BNM’s monetary policy setting is to ensure a sustainable growth momentum of Malaysia’s economy.

Even though core inflation still sticky, weakening external trade performances is seen as dragging factor on overall GDP growth. For the last MPC meeting in Nov-23, we foresee BNM to keep OPR status quo at least until the end of this year.

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