Prepare for a rate hike

According to UBS, Bank Negara is likely to cut its overnight policy rate by 25 basis points in 2015, with lower oil prices cushioning the pressure on inflation.

THERE is a view emerging out there that Bank Negara will have to raise the benchmark overnight policy rate (OPR) by the end of the year or early next year.

This view is premised on a strengthening economy, which usually means higher inflation as wages grow, unemployment comes down and consumption picks up. Earlier in the year, the market consensus was for no change in the OPR this year.