KUALA LUMPUR: Maybank IB Research expects the overnight policy rate (OPR) to likely be reviewed in the second half of 2015 as Bank Negara Malaysia's (BNM) assessment is that the current level is accommodative and appropriate.
The move signals that the OPR is on "pause".
In a note, the research firm described the tone and content of the accompanying Monetary Policy Statement (MPS) as generally "dovish".
"The OPR is on 'pause' as the MPS maintains reference to 'financial imbalances', but the policy focus is 'growth-inflation balance'.
"We expect the OPR pause until the late-third quarter or early-fourth quarter of 2015 at least, to enable BNM to assess and mitigate the impact of the on-going fiscal consolidation.
"This is alongside reforms like the inflationary effect of subsidy rationalisation and introduction of the GST on consumer spending, hence growth.
"Currently, we are pricing in a 25-basis points hike of the OPR at the final MPC meeting of 2015 (November 4-5)," Maybank IB said.
Meanwhile, RHB Research Institute said for prudent reasons, the central bank could revisit the need to raise the rate again in the first quarter of 2015, should the economic growth momentum remain robust.
It said raising the policy rate would provide some support to the ringgit and enable BNM to manage a more orderly outflow of short-term capital at a time when domestic consumer spending would likely spike up ahead of the implementation of the Goods and Services Tax.
"We believe the strength of economic growth will likely be a more important consideration relative to inflation for monetary decision in 2015, given the challenging global economic environment," it added.
Another research firm, Hong Leong Investment Bank said the OPR would be kept unchanged throughout 2015.
It said BNM would weigh the downside risks of external developments to domestic growth against the threat of demand-driven inflation, which is largely absent judging from recent CPI data.
Recent subdued monetary and financial data also pointed to diminishing risk of financial imbalances, it added.-- Bernama