PETALING JAYA: Standard Chartered Research expects Bank Negara to keep the overnight policy rate (OPR) unchanged at 3% at its monetary policy committee meeting, tomorrow.
The research house noted that the ringgit has had some reprieve since the start of March after underperforming in the first two months of 2024.
“Bank Negara’s Financial Markets Committee recently released a statement that mentioned “stepping up coordination with government-linked companies and investment companies to encourage them to repatriate foreign investment income and convert that income into ringgit more consistently.
“This coordination is likely preferred over a tweak to monetary policy by Bank Negara to address foreign exchange weakness, as it is not seen as affecting the growth and inflation outlook at present.”
Additionally, the research house noted that growth is currently soft in Malaysia.
“The economy ended 2023 on a soft note, with the fourth quarter’s gross domestic product contracting 2.1% quarter-on-quarter. Core inflation also eased further to 1.8% year-on-year in January, although upcoming changes to administrative taxes and subsidy rationalisation could add to inflation.
“On the other side of the equation, the ringgit’s weakness likely limits Bank Negara’s room to cut rates to support growth.”