Bank Negara Malaysia Stands Pat On Rates

Bank Negara Malaysia kept the Overnight Policy Rate unchanged at 3.00%, as expected by all but one economist in a Bloomberg survey (the lone dissenter called for a 25bp hike). Our Asia-Pac desk have also anticipated an on-hold decision (see their preview here). Spot USD/MYR inched higher after the decision, but this coincided with an uptick in the BBDXY index.

• The BNM noted that "following a strong outturn in the first quarter of the year, the Malaysian economy expanded at a more moderate pace in recent months as exports were weighed down by slower external demand, as expected."
• "Headline inflation has continued to ease amid lower cost factors. While core inflation has also moderated, it remains elevated relative to the long-term average amid lingering demand and cost factors. For the second half of 2023, both headline and core inflation are projected to trend lower, broadly within expectations."
• "At the current OPR level, the monetary policy stance is slightly accommodative and remains supportive of the economy. The MPC continues to see limited risks of future financial imbalances. The MPC remains vigilant to ongoing developments, and will continue to monitor incoming data to inform the assessment on the outlook of domestic inflation and growth."
• Click here to see the full statement.