KUALA LUMPUR: RHB Research expects Bank Negara Malaysia (BNM) to keep its Overnight Policy Rate (OPR) at three cent until year-end, after raising it to the current level in May 2011.
The BNM Monetary Policy Committee opted to maintain the OPR at three per cent yesterday.
This is the 12th successive meeting at which the central bank has kept the OPR unchanged.
In a note yesterday, RHB Research in agreeing with BNM’s assessment, said risk to the OPR however, was on the upside, if the global economic recovery turned up to be stronger than expected.
“Although inflation is envisaged to trend up this year, it is likely to remain manageable and not expected to pose a major threat to the economy.
“This, coupled with downside risks posed by a challenging external economic environment, suggests that BNM will likely tolerate a slightly higher inflation rate,” it added.
RHB Research said inflation was projected to trend up to around 2.5 per cent this year, from 1.6 per cent in 2012.
“BNM, on the other hand, expects inflation to inch up to 2.0-3.0 this year,” it added.
In a separate note, Kenanga Research said it was confident that the OPR was apt to be supportive to the economy, and remained optimistic on the stability of the market.
Moving forward, the research house said it continued to believe that the OPR would remain at the current level for the rest of the year.
It added that with the general election over, things ought to pick up quickly and trend upward for the rest of the year.
Meanwhile, Alliance Research said the BNM’s decision on the OPR rate was in line with its house and market’s expectation.
“Subsidy rationalisation may be gradually implemented to soften the burden of the people.
Therefore, we expect a steady OPR rate at 3.0 per cent, until the year-end,” it added. — Bernama