OPR Unchanged At 3.00%, Limited Room For Easing Ahead

Economic Research	23 November 2016
Malaysia
Economic Highlights
OPR Unchanged At 3.00%, Limited Room For Easing Ahead Bank Negara Malaysia's (BNM) Monetary Policy Committee (MPC) kept the Overnight Policy Rate (OPR) unchanged at 3.00% on 23 November, which came within expectations. The Central Bank sees that continuing uncertainties in global economic and policy environment, and geopolitical developments would continue to result in periods of volatility in the regional financial and foreign exchange markets. Malaysia’s economic growth is projected by the Central Bank to expand within 4.0-5.0% for 2017. This is in line with our forecast for the economy to grow 4.0% in 2017, albeit at the lower end of the efficient forecast. Given rising currency volatility associated with Donald Trump’s victory in the US Presidency election, we believe there is a strong likelihood the Central Bank to be cautious and keep interest rate unchanged at the current level of 3.00% in 2017. Having said that, there is room for further rate cut should growth fall below expectation in 2017 and the Ringgit stabilises at a stronger level. Economist:  Vincent Loo Yeong Hong  | +603 9280 2172 Economist: Aris Nazman Maslan | +603 9280 2184