KUALA LUMPUR: OCBC Bank does not expect Bank Negara Malaysia (BNM) to cut its Overnight Policy Rate (OPR) in the next Monetary Policy Committee (MPC) meeting on May 6.
Its economist, Wellian Wiranto said the rate has remained unchanged at 1.75 per cent during the previous virus resurgence in January 2021.
BNM has maintained the current rate -- which is at an all-time low of 1.75 per cent -- since Sept 10 last year.
"At the very least, it would start to flag some of the downside risks more vocally and signal that it
continues to have some space for a further accommodative policy if needed,” he said in a research note, today.
Wiranto said the new COVID-19 daily tally has escalated to above 3,000 recently, and while still some distance away from the over 5,700 cases recorded in late January, there are signs that the healthcare system is already stretched as it is.
"Hospitals in the populous Klang Valley area are experiencing a shortage of Intensive Care Unit beds, and the death rate is creeping up.
"Invasion of the more infectious virus variant from India has been reported as well, adding to the sense of unease on the ground,” he said, adding that recent reports suggest that the government is considering a reimposition of the targeted Movement Control Order (MCO) in Selangor, Kuala Lumpur, Penang and Johor.
Although this has been refuted by a senior minister, the evolving situation deserves a close watch as the vaccination rate remains low, with less than two per cent of its population being fully inoculated.
However, Wiranto said there is hope that if the targeted MCO is implemented, any new restriction order can spare the bulk of economic activities, like in January 2021 when factories and shops could stay open even when social and religious activities were curtailed.
"That would limit the economic damage. Still, the impact will remain palpable, hurting the nascent recovery in business and consumer confidence into quarter two,” he added. - Bernama