KUALA LUMPUR: Malaysia’s overnight policy rate (OPR) could rise by 25 basis points (bps) in 2027 amid expectations of further increases in global interest rates, according to MBSB Research.
The research house said markets are anticipating another 25 bps increase in the United States Federal Funds Rate (FFR) by end-2026, with other countries potentially following suit.
"There is a possibility for a 25 bps OPR hike -- a 50 bps increase seems like a stretch, as the OPR does not track the FFR so closely and local inflation is under control.
"However, there is no rush to raise the OPR, as local economic conditions are sound,” it said in a research note today, adding that any OPR increase is likely to take place in 2027.
It said an OPR hike would generally benefit banks’ net interest margins (NIM), as higher loan yields could make wholesale funding more viable and provide some relief from deposit competition.
Based on its scenario analysis, MBSB Research said AmBank, Bank Islam Malaysia Bhd
, Public Bank Bhd and RHB Bank Bhd could see relatively greater NIM benefits from a rate increase, while CIMB Group Holdings Bhd and Malayan Banking Bhd could face some adverse impact due to their exposure to Indonesia.
Overall, MBSB Research maintained its positive call on the banking sector, supported by dividend prospects, business loan growth, fee income and operating expenditure control, although it cautioned that some growth-related tailwinds, particularly business loans and wealth management income, are unlikely to last. - Bernama
