Home / Business & Finance / Stronger Q2 backs BNM’s decision to retain OPR – analysts

Stronger Q2 backs BNM’s decision to retain OPR – analysts

KUALA LUMPUR, Economists believe Bank Negara Malaysia’s decision to maintain the overnight policy rate (OPR) at 3.00 per cent today is on the back of the stronger gross domestic product (GDP) recorded in the second quarter (Q2) this year.

However, they did not dismiss the possibility of the rate cut in the next Monetary Policy Committee (MPC) meeting in November.

In fact, said Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid, the odds for November rate cut have risen.

“Inflation has been running at a very low rate while growth prospects are very challenging in view of the uncertainties in the US and China trade war as well as the UK Brexit.

“In that sense, the scope for monetary policy accommodation is widely open. Its a question of timing and the quantum of the reduction,” he told Bernama.

Sharing similar view, Axi Trader Asia-Pacific market strategist Stephen Innes said the health of economic activity in 2020 remains uncertain.

He added that with robust Q2 results as well as positive export data, BNM would likely to maintain the rate until after the global situation shows negative indications.

Meanwhile, MIDF Research in a note today said the BNM’s decision to maintain the OPR was in line with its expectation as external trade performance was gradually recovering as it returned positive territory despite imports remained in negative, hence widening the trade surplus.

It added that the monetary policy easing in several major economies has eased global financial conditions, but uncertainty from the prolonged trade disputes and geopolitical developments could lead to excessive financial market volatility.

“Concerns over US-China trade crusade remain but comforted temporarily as the duo delayed their latest round of tariff hikes. Domestically, distributive sales continued to expand but at a slightly moderating pace,” it said.

In a statement today on retaining the OPR, BNM said the global economy has been expanding at a modest pace amid slower growth in most major advanced and emerging economies.

Further, the Monetary Policy Committee would continue to assess the balance of risks to domestic growth and inflation, ensuring the monetary policy stance remains conducive to sustainable growth amid price stability.

Source: BERNAMA (News Agency)

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