KUALA LUMPUR (June 28): AmBank Group Research expects Bank Negara Malaysia (BNM) to maintain the overnight policy rate (OPR) at 3.25% at its monetary policy committee (MPC) meeting on July 11 despite the recent rate hikes by some of the regional central banks like Indonesia, the Philippines and India in a move to address inflation and capital outflow.

In a note June 27, AmBank group chief economist and head of research Dr Anthony Dass said he believes the economy is not experiencing strong inflationary pressure.

“Besides, underpinned with external uncertainties such as the US-China trade war, rising interest rates by the US Fed and an emerging market crisis, we feel that BNM can maintain the current OPR at 3.25% throughout 2018 to support the domestic economy, though the normalisation rate is at 3.50%.

“Meanwhile, two key areas of our focus on inflation as we move forward will be: (1) stronger-than-expected rise in global oil prices which can add some pressure on the headline inflation only if the subsidy level is revised upwards; and (2) domestically, stronger-than-expected growth in demand that could support larger cost passthrough and raise demand-driven price pressures,” he said.