KUALA LUMPUR, April 30 — OCBC Bank expects Bank Negara Malaysia (BNM) to maintain the overnight policy rate (OPR) at its scheduled Monetary Policy Committee meeting on May 5.
In a statement today, OCBC economist Wellian Wiranto said the central bank would likely hold the OPR at 2.50 per cent as it is not ready to absorb the rate cut, although he does view another rate cut sometime this year by another 50 basis points.
“Since a vast majority of borrowers do not need to service their loans at all, lower interest rates during the period would carry very little oomph in terms of actual transmission and also bring only a subdued boost to sentiment,” he said.
Moreover, Wiranto said there are potential side effects towards the ringgit while having to ensure the continued health of the banking sector, which bears the brunt of the moratorium costs.
Therefore, he said BNM should consider another statutory reserve requirement (SRR) cut to lower it from 2.0 per cent as an additional measure to help the economy.
“While the central bank is usually at pains in stressing that SRR is an instrument to manage banking sector liquidity and not reflective of monetary policy stance, any easing there would nonetheless help the banking sector tide things over and improve sentiment,” he said. — Bernama
