Tag: geopolitic

BNM expected to maintain OPR at current level throughout the remainder of 2026

\According to HSBC Global Investment Research, BNM made a small but significant change in its statement when it clarified its monetary policy stance as “consistent” with the current outlook, from “supportive”. However, the HSBC branch still believes that BNM is likely to maintain the rate for the remainder of this year. HSBC Senior ASEAN Economist Yun Liu said BNM also changed its language on inflation by expecting inflation to "increase slightly" from "remaining moderate", reflecting concerns over domestic cost pressures stemming from high global commodity prices. "Malaysia is in a more resilient position compared to other regional countries because Malaysia is a net exporter of energy. This does not mean that Malaysia will be protected from energy shocks, however, the impact is expected to be smaller compared to other Asian economies," he said in a research note. According to RHB Investment Bank Bhd, monetary policy will continue to be data-driven, guided in particular by growth prospects and inflation trends, while strong economic fundamentals and continued subdued inflation support a broadly stable policy stance. The investment bank maintained its 2026 Gross Domestic Product (GDP) growth forecast at 4.7 percent, but expected a continued rise in oil prices to US$140 per barrel could reduce Malaysia's growth prospects by between 0.5 and one percentage point. Meanwhile, CIMB Treasury and Market Research is of the view that BNM's latest statement contains a clearer acknowledgement that rising energy prices and supply chain disruptions due to conflicts in West Asia have begun to affect global growth momentum. According to him, the central bank continues to view current inflationary pressures as largely supply-driven and temporary, thus reinforcing expectations for the OPR to be maintained for a longer period than the initial tightening. CIMB also explained that Malaysia's direct trade exposure to Gulf Cooperation Council countries, Iran and Iraq remains moderate at around 1.5 to 2.0 percent of total exports. This suggests the overall impact is expected to occur through commodity prices and global demand flows rather than direct trade disruptions, he added. MBSB Investment Bank Bhd also maintained its expectation that the OPR would remain set at that rate this year, supported by resilient domestic growth, positive labour market conditions, continued investment activity and continued demand for electrical and electronics exports. The investment bank warned, however, that prolonged geopolitical conflict could cause global energy prices to remain high and could lead to an inflation outlook "high for an extended period" for the rest of the year. "Therefore, government policy measures, particularly fuel subsidies and targeted interventions, will be important in curbing the possibility of increasing inflationary pressures," he added. BNM's Monetary Policy Committee (MPC) meeting on Thursday decided to maintain the OPR at 2.75 percent. The rate has not changed since a 25 basis point cut in July 2025. In a statement yesterday, the central bank explained that at the current OPR level, the MPC believes the monetary policy stance is appropriate and consistent with the prospects of continued price stability and sustainable economic growth.

KUALA LUMPUR: The decision on the Overnight Policy Rate (OPR) being maintained at the current level of 2.75 percent on Thursday reinforced expectations that Bank Negara Malaysia (BNM) may keep the rate unchanged for the remainder of 2026. The expectation comes despite investment banks and research arms warning that prolonged geopolitical tensions and high oil […]