Some analysts predict that Bank Negara Malaysia (BNM) will move to raise the Overnight Policy Rate (OPR) to 3% next year gradually.
This was highlighted after BNM implemented a 25 basis point increase at the Monetary Policy Committee (MPC) meeting on July 6, the second consecutive increase this year despite the peak inflation rate.
Looking at Kenanga Investment Bank Bhd's notes, inflationary pressures during the food price spike and the continued recovery in domestic demand will drive further rate hikes.
It is indirectly in line with the cycle of tightening of global central bank monetary policy in combating rising inflation.
Nevertheless, BNM is not expected to act aggressively by implementing a 50 basis point increase.
Instead the central bank of Malaysia will gradually raise 25 basis points at the September and November meetings until the end of the first quarter of 2023 by 3%.
Revealing the CGS-CIMB Securities Sdn Bhd note, BNM will definitely monitor the outlook for economic development, especially if the growth in domestic demand is strong and uncontrolled in the presence of large subsidies.
The string, the 3rd rate hike this year is a certainty while the firm predicts a 50 basis point jump until the end-2023 OPR reaches 3%.
AmBank Research, on the other hand, expects BNM to act more aggressively in cooling inflation and help support the ringgit's weakness against the dollar.
According to the firm, BNM is expected to raise the rate by 50 basis points several times and project that by the end of 2022 the OPR will be at 2.5% to 2.75% while in 2023 the rate will reach 3% -2.25%.
