Could March MPC raise OPR by 25 basis points due to core inflation?

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Bank Negara Malaysia Could Raise OPR by 25 Basis Points in March Meeting Due to Elevated Core Inflation

Bank Negara Malaysia (BNM) maintained its Overnight Policy Rate (OPR) at 2.75 per cent on Thursday. However, BNM economists anticipate a potential 25 basis points increase at the upcoming Monetary Policy Committee (MPC) meeting in March, citing persistently elevated core inflation as the primary driver for this consideration.
Elevated Core Inflationary Pressures

Core inflation has remained a significant concern, prompting economists to project a further tightening of monetary policy. This suggests that underlying price pressures within the economy have not abated sufficiently to warrant maintaining the current interest rate level. The persistence of these inflationary trends is a key factor influencing the MPC's deliberations.
Anticipation of Policy Adjustment

The expectation of a 25 basis point hike in March signifies a proactive stance by BNM in managing inflationary expectations and safeguarding price stability. This potential adjustment would bring the OPR to 3.00 per cent, reflecting a continued commitment to its mandate of price stability. The timing of the announcement on Thursday, just before the Monetary Policy Committee (MPC) meeting, underscored the significance of the decision.
Market Reaction and Sectoral Flows

The period leading up to the BNM's MPC meeting saw significant foreign investor activity, with net selling of Malaysian equities amounting to RM168.5 million in the week ended January 20. This outflow was particularly pronounced on Wednesday, the day before the BNM's announcement, with RM114.6 million in net selling. Sectorally, financial services experienced the largest net foreign outflows at -RM272.4 million.

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Could March MPC raise OPR by 25 basis points due to core inflation?

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