KUALA LUMPUR (July 8): Standard Chartered Global Research expects Bank Negara Malaysia (BNM) keep the overnight policy rate unchanged at 3%, after having cut by 25 basis points (bps) at its May meeting.

BNM's monetary policy committee is scheduled to meet on July 9.

In a note July 6, Standard Chartered said that in the latest monetary policy statement, the policy stance sounded neutral.

It said the rate cut in May was intended to address some signs of financial conditions tightening, rather than any significant growth deterioration or fall in inflation.

"While downside risks to growth remain, we think the May cut was pre-emptive and expect the central bank to remain watchful.

"We expect growth to remain above 4.5% year-on-year (y-o-y) in 2019," it said.

The research house said core inflation (excluding the tax changes effect) was stable at circa 1.6% y-o-y in May.

Meanwhile, Standard Chartered said its Monetary Conditions Index (MCI) indicates that these conditions have loosened in Malaysia.

"The policy rate cut, a weaker real effective exchange rate (REER) and a slight improvement in money-supply growth have contributed to looser conditions," it said.