KUALA LUMPUR, Feb 11 — RHB Research highly anticipates that Bank Negara Malaysia (BNM) will announce another 25 basis points (bps) cut in the Overnight Policy Rate (OPR) at the March 4 policy meeting.
In a research note today, it said the gross domestic product (GDP) is likely to contract by 2.6 per cent year-on-year in the first quarter of 2021 (Q1 2021).
“The contraction in GDP in Q4 2020 is likely to continue in Q1 2021 as the imposition of the lockdown measures continues to affect private consumption and investment,” it said.
Additionally, it said the cyclically adjusted fiscal stimulus is likely to be weak in Q1 2021, while the output gap remains wide, and credit conditions are tightening in the construction, property, and small and medium enterprises (SME) sectors.
As such, the research house opined that the central bank’s policy stance will turn quite dovish on March 4.
“To address the aforementioned tight credit conditions in some sectors, we believe the central bank will also announce sector-specific policies in Q1 2021. These policies could include an extension of loan moratoriums beyond June 2020.
“Further relief measures for SMEs could also be announced. As such, we also maintain our view that the balance of risks is tilted towards another 25 bps OPR cut in Q2 2021,” RHB Research added. — Bernama
