KUALA LUMPUR: Analysts believed that Bank Negara Malaysia (BNM) will leave the overnight policy rate (OPR) unchanged at three per cent in 2017, ahead of the final policy meeting for the year in November.
JF Apex Securities Bhd in a note today said it maintained its view that the central bank will keep the OPR unchanged and do not foresee any further rate hike in second half of the year as cost-driven inflation is expected to be tapered off with mild recovery in global commodity prices as well as strengthening of ringgit.
The report came after Malaysia’s consumer price index (CPI) in August rose to a three-month high to 3.7 per cent compared to a year ago.
JF Apex said the result is above the research house’s expectation of three per cent year-on-year and market consensus of 3.4 per cent year-on-year.
The higher-than-expected result was underpinned by massive jump in transport component.
As compared to previous month, CPI rebounded from sluggish growth by posting 0.9 per cent month-on-month after posting negative growth for fifth consecutive month.
The transport component expanded to 11.7 per cent in August 2017 as compared to 7.7 per cent in July 2017.
JF Apex said it estimated that CPI will grow moderately by four per cent year-on-year in June 2017 buoyed by transport index as it remains elevated to drive the consumer price index.
It has also maintained its headline inflation of 3.6 per cent year-on-year for the whole year of 2017.
PublicInvest Research in a note said relatively stable core inflation suggests no basis for policy intervention by BNM, with Malaysia’s strong first half 2017 gross domestic product growth of 5.7 per cent also a likely deterrent.
However, it said risks such as the spark of war in the Korean peninsula following a series of veiled threats between superpowers may change the policy dynamic.