OPR decision
ALL eyes will be on Bank Negara’s fourth Monetary Policy Committee (MPC) meeting of the year, scheduled for Wednesday.
Economists widely expect the central bank to cut the overnight policy rate (OPR) by 25 basis points (bps) to 2.75%.
A recent Bloomberg survey found that eight out of 15 economists predict a rate cut, while a significant minority of seven expect the OPR to remain unchanged at 3%.
UOB Global Economics & Markets Research expects a 25-bps OPR cut, citing weak domestic data and rising external uncertainties, including geopolitical tensions that could weigh on demand.
It noted that the adjustment would help sustain steady growth, maintain stable inflation and support financial intermediation. CIMB Research also forecasts a 25-bps cut to 2.75% at the July MPC meeting, pointing to weak trade, slowing credit growth and softening private consumption as signals for stronger policy support.
The research house added that a July cut would allow Bank Negara to adopt a more pre-emptive stance amid persistent external headwinds and moderating domestic activity.
RHB Investment Bank, however, expects Bank Negara to keep the OPR steady at 3%, though it acknowledged that the balance of risks leans towards a possible rate cut.
It noted that any move would likely depend on whether pre-emptive easing becomes necessary should US tariffs worsen. Bank Negara is also expected to announce its international reserves as at June 30 today. In addition, the Statistics Department is scheduled to release the industrial production index and manufacturing statistics for May later this week.
Singapore GDP
THE republic is expected to announce its advance estimate for the second-quarter (2Q25) gross domestic product (GDP) this week. ING noted that recent activity data from Singapore – particularly in industrial production and electronics exports – exceeded expectations, aided by a reduction in tariff-related uncertainty.
As a result, ING has revised its 2Q25 growth estimate upward to 2.7% year-on-year (y-o-y). Bloomberg estimates seasonally adjusted growth of 0.8% to 0.9% quarter-on-quarter (q-o-q) and 3.1% y-o-y.
In comparison, UOB estimates 0.5% q-o-q and 3.6% y-o-y growth, following a contraction of 0.6% q-o-q and a growth of 3.9% y-o-y in 1Q25.
Central bank meeting outcomes
THE Reserve Bank of Australia (RBA), the Reserve Bank of New Zealand and the Bank of Korea will all announce their monetary policy decisions this week.
A Bloomberg survey shows that 24 out of 27 economists expect the RBA to cut its cash rate target by 25 bps to 3.60%, while the remaining three said it will remain at 3.85%.
