No More OPR Increases After This?

<p>&nbsp;Heading into Bank Negara Malaysia's (BNM) policy decision on Thursday, the central bank is expected to keep the overnight policy rate (OPR) unchanged at 3.00%.</p><p><br /></p><p>A Reuters poll sees interest rates not only unchanged, but on hold until the end of the year.</p><p><br /></p><p>Although headline inflation fell to a one-year low in May to 2.8%, core inflation was still seen as high, moderating to 3.5%.</p><p><br /></p><p>This indirectly suggests that the central bank will keep its OPR at its current level for longer.</p><p><br /></p><p><br /></p><p>22 out of 25 economists surveyed expect BNM to keep the OPR at 3.00% following the surprise hike in May.</p><p><br /></p><p>While 3 other economists predict that the central bank will implement another increase of 25 basis points to 3.25%.</p><p><br /></p><p>Analysts said that BNM's surprise hike in May was a sign that the tightening cycle was over.</p><p><br /></p><p>Slower growth and subdued inflation are seen as supporting the central bank to keep rates on hold until the end of the year.</p><p><br /></p><p>However, no cuts are expected to occur this year due to the weakness of the currency and high inflation due to expensive imports restraining BNM from doing so.</p>