Will Bank Negara maintain OPR at 3.0% throughout 2024?

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Bank Negara Malaysia Expected to Maintain Overnight Policy Rate at 3.0% Throughout 2024

Analysts widely anticipate that Bank Negara Malaysia (BNM) will maintain the overnight policy rate (OPR) at its current level of 3.0 per cent for the entirety of 2024. This projection is based on the assessment that the existing OPR is already at a rate conducive to sustained economic growth within Malaysia.
Stable Domestic Demand Amidst External Challenges

MIDF Research projects that BNM will keep the OPR unchanged throughout 2024, citing a challenging external environment coupled with stable domestic demand. Factors such as ongoing geopolitical tensions, elevated global price levels, and the potential for a global economic slowdown are expected to persist. Despite these external headwinds, domestic economic prospects are seen as resilient, primarily supported by steady domestic consumption.
Macroeconomic Considerations Guiding Policy

The decision to maintain the OPR will be influenced by several key macroeconomic indicators. These include the overall stability of economic growth, the trajectory of price increases, and the conditions within the labour market. A continued improvement in these areas, particularly robust domestic demand, will be closely monitored by BNM when formulating its monetary policy stance.
No Interest Rate Hikes Expected by RHB Research

RHB Research also concurs with the view that Malaysia is unlikely to see an increase in its interest rates in 2024. Their analysis suggests that factors such as the expected consolidation of the US dollar-ringgit exchange rate towards the end of 2024 and the continued elevated domestic interest rates will narrow the differential with developed market rates. This scenario supports the expectation of a stable OPR.
Ringgit Outlook and Fiscal Support

Furthermore, RHB Research forecasts a potential strengthening of the ringgit against the US dollar by the end of 2024, moving towards the 4.50-4.70 range. This outlook is supported by the narrowing positive carry on the US dollar against ASEAN currencies in 2024, which is expected to lead to broad currency strength. Additionally, the implementation of fiscal consolidation measures and initiatives outlined in Budget 2024 are anticipated to provide further support to the ringgit.

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Will Bank Negara maintain OPR at 3.0% throughout 2024?

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