Malaysia: BNM keeps rates on hold – UOB

Senior Economist at UOB Group Julia Goh and Economist Loke Siew Ting comment on the latest decision by the Bank Negara Malaysia to leave rates unchanged.

Key Quotes

“Bank Negara Malaysia (BNM) kept the Overnight Policy Rate (OPR) unchanged for the fifth straight meeting at 1.75% today (6 May). This was in line with Bloomberg consensus and our expectations. The next scheduled Monetary Policy Committee (MPC) decision is on 8 July 2021.”

“The overall tone of the latest monetary policy statement is deemed neutral and largely unchanged from March’s statement even as the country is facing higher COVID-19 cases and tighter containment measures in targeted areas. BNM indicated further improvement in both global and local economy, supported by increased manufacturing and trade activities. The ongoing roll-out of the domestic vaccination program and continued policy support is expected to lift sentiment and aid recovery. More vaccine supplies are scheduled to arrive by mid-year.”

“BNM reiterated that the current level of interest rate remains appropriate and accommodative amid persistent downside risks to the growth outlook. Although parts of the economy are expected to face lingering challenges due to pandemic-related risks, we see further room to ease rates will be constrained by a temporary run-up in inflation. We expect BNM to keep the OPR steady at 1.75% for the rest of the year.”