KUALA LUMPUR: Bank Negara Malaysia (BNM) is likely to keep the overnight policy rate (OPR) unchanged at 3.0 per cent at its upcoming monetary policy meeting on July 11, despite the recent implementation of diesel subsidy rationalisation, says Standard Chartered Bank (Singapore) Ltd (StanChart Singapore).
However, the bank said it will watch for any tweaks to BNM’s inflation outlook given the diesel subsidy rationalisation, which was implemented on June 10.
"Our initial estimate is a modest 0.1 percentage point (ppt) impact on inflation given the targeted nature of the subsidy cut.
"However, we will keep an eye out for second-round effects, especially as there may be further subsidy rationalisation amid Malaysia’s growth recovery," it said in its global research note today.
StanChart Singapore said it will also monitor changes in BNM’s assessment of the ringgit after the central bank said in a note in May that "the ringgit currently does not reflect Malaysia’s economic fundamentals and growth prospects".
"We view this as an upgrade to the central bank’s view from March when it said 'the ringgit is currently undervalued, given Malaysia's economic fundamentals and growth prospects'," it added.
At 9.05 am, the ringgit was flat at 4.7070/7130 against the US dollar compared to Friday's close of 4.7065/7110. - Bernama
