OCBC: BNM to hold OPR at November meeting


OVERSEA-CHINESE Banking Corp Ltd (OCBC Bank) expects the Bank Negara Malaysia (BNM) to hold its Overnight Policy Rate (OPR) at 1.75% at the next Monetary Policy Committee meeting scheduled for Nov 3, assuming a favourable outturn in the country’s fight against Covid-19.

The central bank has slashed the OPR four consecutive times this year, kicking off with the two 25-basis-point (bp) reductions at the January and March meetings, followed by a 50bps cut in May and another 25bps cut in July.

“The risk of a cut goes up alongside infection counts in the crucial next few weeks,” OCBC Bank said in a note yesterday.

Malaysia registered a record-high 317 new cases on Saturday, followed closely by a tally of still-high 293 on Sunday. Yesterday, 432 new cases were recorded, the highest daily increase since the pandemic hit the country.

Sabah, which held a state election last week, has been the epicentre of the latest outbreak, while new clusters are afflicting Kedah and pockets of Selangor surrounding the capital too.

The bank said as the authorities warned of the need to reimpose restriction measures if cases reach triple digits — which is where things stand now — concerns are rife of another round of the Movement Control Order soon.

“For now, that prospect remains relatively low, with the senior minister (security cluster) stating that there is no need for lockdown now, given the relatively isolated nature of the recent uptick.

“Still, until the cases level out more convincingly, the worry about another painful round of restrictions will not ebb away,” it added.

OCBC Bank remains hopeful that better social awareness compared to earlier this year can help Malaysia avoid a lockdown, but a more uncertain environment will nonetheless be detrimental to the nascent economic recovery, as reflected in indicators such as credit card purchases and car sales recently.