OPR likely to hold
BANK Negara Malaysia (BNM) is widely expected to keep the overnight policy rate (OPR) unchanged at its final Monetary Policy Committee (MPC) meeting of the year on Thursday, in what is expected to be a non-event for markets.
The central bank has maintained the OPR at 2.75% since cutting the benchmark rate by 25 basis points (bps) in July 2025.
A Bloomberg survey showed eight of nine economists expect BNM to hold the OPR at 2.75%, while one forecasts a 25-bps hike to 3%.
CIMB Research expects BNM to keep the OPR unchanged, with markets focused on the central bank’s policy guidance.
With September headline inflation at 1.8%, CIMB Research said investors would look for BNM’s assessment of the impact of Budget 2027 measures and higher energy prices on growth and inflation heading into 2027.
A firmer assessment of domestic demand and inflationary pressures would reinforce its forecast for a 25-bps rate hike in March 2027.
Kenanga Research also expects BNM to hold rates steady, with attention on the policy statement for clues on the monetary policy outlook.
In contrast, UOB Global Economics & Markets Research expects a 25-bps hike to 3%, citing a shift in policy guidance in September and stronger-than-expected third-quarter GDP growth.
It said the expansionary Budget 2027, including higher minimum wages, increased cash assistance, tax cuts and enhanced tax relief, would support domestic demand into 2027 amid benign inflation.
Meanwhile, the S&P Global Manufacturing Purchasing Managers’ Index or PMI is also due this week, after easing to 49.9 in September from 50.2 in August.
Trading Economics’ models and analyst expectations project the index to rise to 50.9 by the end of the current quarter.
Inflation data
INDONESIA, South Korea, Taiwan and Thailand are scheduled to release their respective consumer price index or CPI data this week.
According to Bloomberg estimates, Indonesia’s headline inflation is expected to ease to 3.25% year-on-year (y-o-y) in October from 3.28% in September, while core inflation is projected to moderate to 2.7% from 2.84%.
South Korea’s inflation is forecast to ease to 2.8% y-o-y from 2.9%, with core inflation slowing to 2.7% from 2.8%.
ING said inflation would, nevertheless, remain above the Bank of Korea’s target, while strong exports would support growth and reinforce the case for maintaining a restrictive monetary policy stance.
Meanwhile, ING expects Taiwan’s inflation to remain elevated at around 2.7% y-o-y in October, with another strong reading following September’s surprise surge likely to strengthen the case for a central bank rate hike in December.
