OCBC Bank expects that the Bank Negara Malaysia (BNM) to stay pat on the Overnight Policy Rate (OPR) for the rest of 2019, barring any significant major downturn in global growth.
In a research note today, OCBC said the central bank gave no further hints of future movements except to state that "the Monetary Policy Committee (MPC) will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation."
"BNM cut their benchmark rate by 25 basis points from 3.25 per cent to 3.00 per cent, becoming the first central bank in ASEAN to undertake an easing (measure). This was contrary to our expectations as we had expected for a cut to come as early as July 2019 instead," it said.
RHB Research also opined that it expects no further cuts to the OPR for the rest of 2019 as economic growth, although moderated, remained at a commendable pace at this juncture.
"There are downside risks, however, should there be further negative developments on the global trade front that may threaten to drag Malaysia's economic growth lower."
In a separate note, RHB Research said the reduction, first time in almost two years, was in line with the research firm and consensus estimates.
"BNM also noted that there were some recent signs of tightening of financial conditions, although domestic monetary and financial conditions remained supportive of economic growth. The adjustment to the OPR is therefore intended to preserve the degree of monetary accommodativeness," it added.