Yesterday's monetary policy decision saw Bank Negara Malaysia (BNM) maintain the overnight policy rate (OPR) at 2.75%.
MIDF Research believes that the decision was made because BNM wants to take a 'wait and see' approach to assess the market's performance after the rate was raised 4 times last year.
This is because the focus during the central bank's policy setting is to ensure that Malaysia's economic growth momentum remains sustainable.
Even so, the research firm expects it to raise the OPR back to the pre-pandemic level of 3.00% in the first half of the year.
This follows the rising trend of core inflation and domestic demand which continues to strengthen beyond expectations.
In addition, MIDF Research also sees the possibility that BNM will normalize the Statutory Reserve Requirement (SRR) to 3% this year after it was lowered to 2% three years ago.
However, it depends on the stability of economic growth, inflation and further progress in macroeconomic conditions, especially the continued recovery in the labor market and domestic demand.
