Thailand
Malaysia: Bank Negara likely to maintain OPR at 3.25%, say analysts
KUALA LUMPUR: Kenanga Investment Bank Bhd believes that Bank Negara will retain the overnight policy rate (OPR) at 3.25% this year as part of the strategies to ensure capital market stability, ample liquidity and to remain supportive of banking industry growth.
In a research note, Kenanga said year-to-date (YTD) loan growth has moderated to 5.1%, versus 5.4% in 2017. “It is within our whole-year estimate of 5%, while deposit growth expanded by 5.4% YTD (2017: 4%).
“Loan growth is forecast to ease further to 4.2% in 2019, given the subdued inflationary trend and prospects of moderating global growth,” the research house said.
Similarly, RHB Research Institute said it expected the central bank to maintain the OPR at 3.25% as this would maintain the stability of the ringgit versus the US dollar against the backdrop of ongoing monetary tightening by the US Federal Reserve and the greenback’s strength.
“Looking ahead, we expect Malaysia’s M3 and loan to grow at a healthy pace of 5.5% and 5.2% in 2019, from estimates of 5.2% and 5%, respectively, for 2018,” it added.
However, the higher growth in money supply is unlikely to result in any demand-pull price pressure, as core inflation remains subdued. Malaysia’s M3 growth gained pace at 7.4% year-on-year (y-o-y) in November from a revised 7.1% in October, supported by higher demand for funds from the public and private sectors.
The growth of narrow money (M1) gained pace to 3.3% y-o-y, from 3.1% in October amid a slowdown in the growth of demand deposits and currency in circulation.
Loan growth rose steadily for the fourth straight month, supported by stronger corporate loan demand, while deposit growth increased in tandem.
November’s loan growth rose steadily for the fourth straight month to 6.2% y-o-y from 5.7% in October, driven by higher loans extended to the corporate sector, which saw growth accelerating to 6.8% y-o-y during the month (October: 6.1%).
“This was underpinned by higher loans extended to the manufacturing, wholesale and retail, finance and insurance, construction and mining and quarrying sectors,” the research house said. — Bernama
Source: https://www.thestar.com.my/business/business-news/2019/01/03/bank-negara-likely-to-maintain-opr-at-325-say-analysts/#iEPthcBdaDXpgPfU.99