The week ahead - OPR, China conference, US jobs, PMI,

US jobless unemployment form

Spotlight on OPR

FOCUS will be on Bank Negara’s monetary policy decision. Bank Negara’s (pic) Monetary Policy Committee (MPC) is scheduled to meet on Thursday to review the overnight policy rate (OPR).It has maintained the OPR unchanged at 1.75% on Jan 20.

According to a Bloomberg survey, all seven economists polled expect Bank Negara to keep its policy rate unchanged at 1.75%.

UOB Global Economics & Markets Research thinks Bank Negara is less inclined to use broad and blunt monetary policy tools. Bank Negara has kept its key policy rate on hold since September 2020.

ING senior economist Prakash Sakpal said the central bank has been defying the easing pressure even as tighter Covid-19 movement restrictions are poised to hit the economy hard in the current quarter.

It should have more reasons to do so following the release of January CPI data showing a significant improvement in inflation, to -0.2% year-on-year from -1.4% in December.

ING has dropped its call of a 25 basis points rate cut in March and shifted to a stable policy view for the rest of the year. Other key statistics this week include IHS Markit Malaysia Manufacturing Purchasing Managers’ Index, external trade indices and foreign reserves.

China two sessions

THE annual meetings of the National People’s Congress and the Chinese People’s Political Consultative Conference, known as the “two sessions” will take place this week. According to UOB, topics in focus include attaining the goal of advance economy by 2035, enhancing the national strategic scientific and technological strength as well as the stability of the industrial supply chain.

It added that there would also be attention on China’s implementation of the “dual circulation” strategy to promote domestic consumption and high-quality economic development under the plan.

China usually announces its yearly gross domestic product (GDP) growth target, although last year it did not because of economic uncertainties caused by Covid-19.

ING expects them to omit the GDP growth target once again this year. It forecasts GDP to grow 7% in 2021. This is largely due to the low base of only 2.3% growth in 2020. China is also expected to announce Caixin manufacturing PMI for February today.

US jobs report, PMI

People line up to pick up jobless claim forms.People line up to pick up jobless claim forms.

DATA flow from the US includes the jobs report, Markit Manufacturing PMI data and ISM manufacturing PMI data for February. The weekly initial jobless claims fell to 730,000 last week, below economists’ estimates of 845,000.

IHS Markit said the performance of the US economy would be gauged by updates to the ISM surveys and the labour market, with nonfarm payrolls expected to rise by 110,000 – an improvement on the disappointing 49,000 increase seen in January but still indicative of a weak job market recovery, underscoring the deep scars left by the pandemic.

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