KUALA LUMPUR (March 29): CIMB Investment Bank Bhd said it maintained its end-2018 Malaysia overnight policy rate (OPR) forecast at 3.25% and looked ahead to 2019 for the next OPR hike.

CIMB wrote in a note today that Bank Negara Malaysia (BNM) may be closer to the next interest rate increase than CIMB had thought, as BNM expects the nation's output gap to turn positive.

CIMB said: "The central bank expects the output gap to turn positive but weak inflation buys policymakers some time to wait for improvements in consumer sentiment, for evidence of more equitable distribution of economic gains, and for assurance that external risks remain at bay."

TA Securities Holdings Bhd wrote in a report today that TA does not see much pressure for BNM to change its accommodative monetary policy stance in 2018 after the last hike in January 2018.

TA said this follows factors including moderate inflation, modest growth in Malaysia's real gross domestic product and a strong ringgit against the US dollar.

"Despite the US interest rate hike and gradual monetary tightening going forward, we do not foresee further changes in Malaysia's OPR this year. Maintain our OPR forecast of 3.25% this year," TA said.

CIMB and TA's notes followed the release of BNM's 2017 annual report yesterday. BNM said it had projected Malaysia's 2018 headline inflation to average between 2% and 3% after taking into account a higher base in 2017 and stronger ringgit.

BNM said the country's headline inflation is expected to moderate in 2018 from 3.7% in 2017.