JPMorgan: Malaysia expected to raise OPR by 25 basis points each in Q3, Q4 2022

The Bank Negara Malaysia logo is seen at its headquarters in Kuala Lumpur January 23, 2020. — Picture by Ahmad Zamzahuri
The Bank Negara Malaysia logo is seen at its headquarters in Kuala Lumpur January 23, 2020. — Picture by Ahmad Zamzahuri

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KUALA LUMPUR, Nov 29 — JPMorgan Chase & Co continues to expect Malaysia to tighten its monetary policy by 25 basis points (bps) each in the third and fourth quarters of 2022 (Q3 and Q4 2022), although the emergence of the Omicron variant of the coronavirus could raise near term uncertainties.

“We continue to expect monetary policy tightening of 25 bps each in Q3 and Q4 2022 as labour conditions outside the goods-producing sectors catch up alongside the broader resumption in services, in turn guiding core price higher, albeit at a gradual pace,” the investment bank’s Singapore-based Asia Pacific emerging markets research analyst Nur Raisah Rasid said in a statement today.

Bank Negara Malaysia has kept the benchmark overnight policy rate (OPR) unchanged at 1.75 per cent.

On the emergence of the Omicron variant, Nur Raisah said as Malaysia continues to move towards “endemic equilibrium,” the emergence of the new coronavirus variant could raise near-term uncertainties in the path forward.

However, she said Malaysia’s high vaccination rates might imply a higher tolerance for future outbreaks, and “thus maintain our current forecasts of the OPR at this juncture.”

Nonetheless, she said the investment bank remains watchful over incoming news regarding transmissibility of the variant and vaccine efficacy, which may prompt some tightening in restrictions in line with steps taken by a handful of countries. — Bernama

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