BNM will turn ‘hawkish’ in H2 2023, say research firms FMTNews FMTBusiness
Maybank Investment Bank says the current pause in raising the overnight policy rate does not mean the end of the OPR hike cycle.
“From our perspective, BNM should turn hawkish in H2 2023 due to several factors, including China’s reopening which has finally led to a turnaround in its economy with a strong pickup in February’s purchasing managers index, alluding to positive spillover effects towards global growth,” it said in its Economics Update.
Markets have since priced in an almost 75% chance of a 50bps rate hike at the Fed’s March 21-22 policy meeting, according to CME’s FedWatch tool.Hong Leong Investment Bank also leans towards BNM resuming OPR hikes sooner rather than later. In a research note, it maintained its expectation for BNM to increase the OPR by another 25bps as early as May, bringing the rate to 3% by year end.
Maybank Investment Bank noted that the central bank in its Monetary Policy Statement indicated it is still assessing the impact of last year’s cumulative 100bps OPR hikes given the lag effect of monetary policy on the economy 12-18 months after the start of the OPR hike cycles in May 2022. Meanwhile, Public Investment Bank said it maintained the view that BNM will likely retain its wait-and-see stance by pausing and keeping the OPR unchanged at the May MPC meeting.
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