5 October, KUALA LUMPUR – OCBC Bank expects the Bank Negara to hold its overnight policy rate (OPR) at 1.75 per cent at the next Monetary Policy Committee’s meeting scheduled for Nov 3, assuming a favourable outturn in the country’s fight against COVID-19.
The central bank had slashed the OPR four consecutive times this year, kicking off with the two 25 basis points (bps) reductions at the January and March meetings, followed by a 50 bps cut in May and another 25bps cut in July.
“The risk of a cut goes up alongside infection counts in the crucial next few weeks,” OCBC said in a note today.
Malaysia registered a record-high 317 new cases on Saturday, followed closely by a tally of still-high 293 on Sunday.
Sabah, which held a state election last week, has been the epicentre of the latest outbreak, while new clusters are afflicting Kedah and pockets of Selangor surrounding the capital too.
The bank said as the authorities had warned of the need to reimpose restriction measures if cases reach triple digits, which is where things stand now, concerns have been rife of another round of the Movement Control Order (MCO) soon.
“For now, that prospect remains relatively low, with Senior Minister (Security) stating that there is no need for lockdown now, given the relatively isolated nature of the recent uptick.
“Still, until the cases level out more convincingly, the worry about another painful round of restrictions will not ebb away,” it added.
The OCBC remained hopeful that better social awareness compared to earlier this year can help Malaysia avoid a lockdown, but a more uncertain environment will nonetheless be detrimental to the nascent economic recovery, as reflected in indicators such as credit card purchases and car sales recently.