Malaysia OPR rate increase to 3.0 % !!

HSBC Expects BNM To Hold OPR At 3.0 Per Cent On Sept 8

KUALA LUMPUR, Sept 5 (Bernama) -- Bank Negara Malaysia (BNM) is expected to stay on the conservative side and keep its overnight policy rate (OPR) on hold at three per cent at its Monetary Policy Committee (MPC) meeting this Friday, said HSBC Global Research.

In a statement Monday, its Asian economist, Wellian Wiranto, said the global uncertainties that held BNM back in July had not been resolved.

"Thus, caution about global growth risks would trump the desire to see rates higher for now, and the BNM will most likely hold the policy rate unchanged at three per cent on Sept 8," he said.

On whether BNM would then increase OPR at its final meeting for the year in November, Wiranto said it would be again very much dependent on whether the cliff-hanger global atmosphere dissipated by then.

At the last MPC meeting in July, BNM had decided to maintain the OPR at three per cent after rising it for the first time this year by 0.25 basis point in May.

Wiranto said while the domestic portion of the economy would help buffer Malaysia from any potentially sharp global downturn to some extent, it remained a fact that it was one of the highest beta economies in the region, with exports being in excess of 100 per cent of its gross domestic product.

"On the one hand, the increased share in which Malaysia is selling to fellow emerging markets like China in recent years, at a time when shipments to European Union (EU) and US have become relatively less important than before, should help to ease the pain, should the darker calls on global economy materialise," he said.

Nonetheless, the economist said, given that the EU and US together still commanded a good one-fifth of Malaysian exports directly, and a higher share indirectly through transshipment and further processing in other countries, the health of these economies would invariably be keenly watched by BNM.

Source: Bernama