BNM Hiked OPR Again as Macroeconomic Condition Improves

BNM Hiked OPR Again as Macroeconomic Condition Improves

Another +25bps as expected. BNM opted to increase the Overnight Policy Rate (OPR) from 2.00% to 2.25% in its fourth Monetary Policy Meeting of 2022, matching with our and market’s expectations.

In the Monetary Policy Statement, BNM highlighted that the continuous expansion in global economy and improvement in Malaysia’s labour market conditions continue to support the improvement in domestic economic activity.

Sanguine economic prospects. In terms of growth outlook, BNM foresees growth momentum is on a firmer footing, driven by strengthening domestic demand and strong exports growth.

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Endemicity and OPR

The transition to endemicity and international borders reopening will result in stronger economic activity, lower unemployment rate, with more people entering the job market rate and better income outlook.

"50bps hike in 2HCY22 amid stronger-than-expected domestic demand. We believe the current focus of BNM’s monetary policy setting is to ensure a sustainable recovery of Malaysia’s economy.

"With the rise in core inflation trend and stronger-than-expected domestic demand, we believe BNM will raise its OPR by 50bps in 2HCY22.

"At this point, we expect further policy normalisation will likely be carried out in the Sep-22 MPC meeting with another +25bps hike," says MIDF.