KUALA LUMPUR, April 23 — AmBank (M) Bhd expects another 25 basis points (bps) cut in the Overnight Policy Rate (OPR) as inflation is expected to stay weak in 2020.

The benchmark index currently stood at 2.50 per cent, after being slashed by 25 bps on March 3 — the second reduction in less than three months. The rate was the lowest since March 2011.

The next Bank Negara Malaysia’s Monetary Policy Committee meeting is scheduled on May 5.

AmBank said inflation is more likely to average around +0.3 per cent with room to tread into a deflationary reading of -1.5 per cent.

Should the headline inflation fall into deflation, it would be the first since 1983, it added.

"Inflation is projected to stay weak in 2020 due to lack of overall pressure from cost-push and demand-pull inflation.

"There is not much cost pressure, partly due to weak commodity prices, added with an economy that is plagued with excess capacity,” said AmBank (M) in a research note today.

March’s headline inflation fell into deflation for the first time since February 2019.

It fell by 0.2 per cent year-on-year (YoY) from +1.3 per cent YoY in February, a tad higher than AmBank’s expectation of -0.3 per cent while market consensus stood at -0.1 per cent.

This brings inflation to average at 0.9 per cent YoY in the first quarter of 2020. — Bernama