Malaysia: Expect 25bps hike in OPR to 3.25% - TDS

Analysts at TDS expect the BNM to hike the Overnight Policy Rate (OPR) by 25bps to 3.25% for the first time since mid-2014 today.

Key Quotes

“Our expectation is supported by the statement from the prior November 9 meeting that the MPC “may consider reviewing the current degree of monetary accommodation.” The need to normalize rates is a function of strong global and, especially, domestic growth, while inflation continues to push higher on “robust domestic demand” and rising oil prices.”

“Inflation in September (the last available print at the time of the November 2017 meeting) stood above current levels (4.3% Y/Y vs December’s 3.5% now available). However, it is unlikely that inflation will ease further given the healthy state of Malaysia’s economy. We therefore hold onto our expectation that the BNM will hike the OPR today, in line with the overwhelming consensus.”