KUALA LUMPUR (March 6): Bank Negara Malaysia (BNM) will likely maintain the overnight policy rate (OPR) at 3%, when its Monetary Policy Committee announces its decision on Thursday, Standard Chartered (StanChart) said.

Both economic growth and inflation are moderating, making it unlikely that the central bank will raise rates to support the ringgit, StanChart said in a preview note. Further, the currency weakness isn't affecting the growth and inflation outlook, it said.

"We expect the central bank to keep the OPR unchanged," StanChart said. The ringgit also has had some reprieve since the start of March following a decline in January to February, the bank noted.

StanChart's prediction dovetails with the consensus among economists. A survey of 19 economists by Bloomberg unanimously called for the central bank to stand pat in its second of six scheduled monetary policy reviews for this year.

Last week, the central bank's Financial Markets Committee highlighted "coordination with government-linked companies and investment companies to encourage them to repatriate foreign investment income, and convert that income into ringgit more consistently".

"This coordination is likely preferred over a tweak to monetary policy by BNM to address foreign exchange weakness, as it is not seen as affecting the growth and inflation outlook at present," StanChart said.

The ringgit's persistent weakness will likely limit the central bank's room to cut rates to support growth, StanChart flagged, citing a 2.1% quarter-on-quarter contraction in the final three months of 2023, and core inflation which eased to 1.8% year-on-year in January.