Agree Or Not? Here's an Expert View on OPR Rates in November


 'Agree with the opinions of these experts?'

Bank Negara Malaysia's (BNM) Monetary Policy Committee (MPC) meeting will be held on 2 and 3 November 2022, and analysts are starting to give their views on the country's tightening policy.

According to a survey conducted by Reuters, the average analyst predicted that BNM would raise the overnight policy rate (OPR) for the 4th time in a row to curb inflation and support the currency.

For the record, BNM started raising rates for the first time in May even though at that time inflation was within the target level of 2%-3%.

And since the first increase, BNM has raised rates by 75 basis points.

Returning to the original news, the inflation rate in September fell from 4.7% to 4.5% but the strengthening of domestic demand and the accommodative budget increased the risk of the stubborn increase in commodity prices.

That streak, 2 out of 27 analysts expect BNM to raise 25 basis points to reach OPR at 2.75%.

Commenting one of them, Sanjay Mathur, the basis was made based on the uncertainty of the 2023 fiscal policy and rate hikes by the Federal Reserve (Fed) which affect the dollar.

So he felt the need for BNM to parallel the rate hike to support the value of the ringgit against the dollar.

In addition, 2 other analysts forecast BNM to pause hikes at the November meeting as the economic outlook is seen as bleak and to review the accumulative effects of rates.

Meanwhile, 90% of economists forecast BNM to raise rates in Q1 next year with the median forecast at 3%.