The Overnight Policy Rate (OPR) is expected to remain unchanged at 3% throughout 2025, according to Public Investment Bank Bhd (PIVB). This projection aligns with the bank’s baseline outlook for steady economic performance, including a gross domestic product (GDP) growth forecast of 4.9% and an inflation rate of 2.4% for 2025, compared with 5.1% and 1.8% respectively in the previous year.

In its Economic Update research note, PIVB stated that domestic economic activity remains broadly in line with Bank Negara Malaysia’s (BNM) projections. Given that downside risks to growth still persist, the investment bank anticipates that the Monetary Policy Committee (MPC) will maintain a cautious approach and keep policy settings unchanged for the time being. It noted that BNM is likely to adopt a wait-and-see stance, closely monitoring external developments, especially those linked to trade and tariff measures.

PIVB also indicated that in the absence of significant shocks to the growth or inflation outlook, a move towards policy normalisation is not anticipated. The bank highlighted that particular attention will be given to the potential economic ramifications of countervailing tariffs imposed by the United States and ongoing trade actions related to the semiconductor sector, as these could materially affect Malaysia’s external sector. Such developments, it said, will play a key role in shaping the monetary policy trajectory going forward.

CIMB Securities Sdn Bhd echoed this sentiment in its Treasury and Markets Research note, also projecting an extended pause in the OPR at 3% throughout 2025. The firm emphasised the difficulty in forecasting due to heightened global policy uncertainties and the conflicting effects of supply shocks on both growth and inflation. According to CIMB Securities, BNM has indicated that monetary policy will remain data dependent in light of these challenges.

It said the positive output gap, expected to be 0.5% in 2025 compared with 0.4% in 2024, shows that monetary policy is likely to respond to changes as they happen, rather than act in advance of global and domestic policy developments.

(Source: The Star)

• TAGS:
• CIMB Securities Sdn Bhd echoed
• Monetary Policy Committee
• MPC
• OPR
• Overnight Policy Rate
• PIVB
• Public Investment Bank Bhd