Economic Analysts Predict Another OPR Cut

Alex Cheong Pui Yin

2nd March 2020 - 2 min read

(Image: The Star)

Economic analysts have predicted that Bank Negara Malaysia (BNM) may introduce another overnight policy rate (OPR) cut this year. This is due to expectations of a slower global economic growth brought about by the Covid-19 outbreak.

RHB group managing director and chief executive officer, Datuk Khairussaleh Ramli, said that further cuts are possible because the business outlook for year 2020 remains challenging.

CGS-CIMB Equities Research, on the other hand, predicts that the OPR cut will be implemented tomorrow, down by as much as 25 basis points.

(Image: The Malaysian Reserve)

OCBC Bank economist, Wellian Wiranto, also shares a similar sentiment. He said that in spite of the introduction of the Economic Stimulus Package 2020, the Malaysian economy will still need all the help that it can get, given the recent political instability within the country.

JP Morgan, too, anticipates an OPR cut soon, as BNM is likely to depend on both fiscal and monetary support to boost Malaysia’s economic recovery. The global financial services firm based its claim on a similar strategy adopted by the central bank during the SARS outbreak in 2002-2003.

Affin Hwang Capital and Kenanga Research both foresee a rate cut tomorrow as well.

TA Research further says that even a 50 basis point-cut is possible, citing bleak economic prospects, weak sentiment, and low inflation as reasons.

(Image: UOB Glassdoor)

UOB, in contrast, believes that the OPR will remain unchanged for now. However, if the country’s economy continues to be threatened by prolonged threats of the outbreak, further OPR cuts will be likely.

Prior to this, the Monetary Policy Committee (MPC) of Bank Negara Malaysia (BNM) had already reduced the OPR once by 25 basis points in January 2020, bringing the rate from 3.0% down to 2.75%. Banks subsequently responded to it by lowering their own base rate (BR) and base lending rate (BLR).

(Source: The Edge Markets, The Star, The Sun Daily)

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Alex Cheong Pui Yin

Previously covered recruitment-related stories and had a short stint as a copywriter for the property industry. She subsequently developed an interest in investment and robo-advisors.

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