• BNM holds OPR at 1.75%

• Growth trajectory is projected to improve

• The balance of risks to the growth outlook remains tilted to the downside

• Expect OPR to stay unchanged for the rest of the year

Bank Negara Malaysia’s Monetary Policy Committee (MPC) kept the Overnight Policy Rate (OPR) unchanged at 1.75%, as expected, for a fifth straight meeting. In July last year, BNM reduced the OPR to 1.75%, a record low since the floor was set in 2004. It has since maintained the rate. It is still premature to cut interest rates at this juncture as the current OPR is adequate to support the ongoing economic recovery. In addition, given the return of inflation, a reduction in OPR may not be favourable in dealing with price pressures in the coming months.

BNM also highlighted that its Monetary Policy Committee MPC considered the monetary policy stance to be appropriate and accommodative. The bank remains committed to utilise its policy levers as appropriate to create enabling conditions for a sustainable economic recovery.

Source: BIMB Securities Research - 6 May 2021