- AZMAN GHANI/ The Star
KUALA LUMPUR: Bank Negara Malaysia (BNM) is expected to maintain the overnight policy rate (OPR) at three per cent in its next monetary policy committee (MPC) meeting, said AmBank (M) Bhd.
AmBank opined that the 125 basis points (bps) post-Covid normalisation has brought the growth inflation balance to the desired level.
BNM will hold 2023’s sixth and last MPC meeting on Nov 1 and 2.
AmBank said at the previous MPC meeting that BNM had provided a change in guidance to "supportive” from "slightly accommodative”.
"We see no change to the OPR, and we opine that the 125 bps post-Covid normalisation has brought the growth inflation balance to the desired level,” it said in a research note today.
On the ringgit, the bank anticipated that support for the local note would eventually step in when the United States Federal Reserve (Fed) cut the interest rate by mid-2024.
"We reiterate the call of Fed to cut rate by mid-2024, as the effects of tight monetary policy are starting to materialise, and with the medium-term outlook of the Fed to turn dovish, support for the ringgit would eventually step in,” it said.
According to AmBank, the ringgit posted a new record low when it reached an intraday low of 4.796 against the greenback earlier last week.
It said this was because the ringgit could not find any support amidst expectations of a "higher-for-longer” theme and risk-off environment due to heightened conflicts on the international stage.
"Furthermore, the weakening bias in Chinese yuan translates into further weakening of the ringgit, as both yuan and ringgit hold more than 90 per cent correlation in recent years,” it added. - Bernama
