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MNI BNM Preview - January 2023: +25bps Likely, But Getting Closer To A Pause

BNM
  • The consensus looks for a 25bps hike from BNM tomorrow. Our base case also sits in the +25bps camp. Like elsewhere in the region, headline inflation pressures have cooled. The latest CPI y/y coming in at 4.0%, compared with 2022 highs at 4.70%. Still, this is only a modest move lower, while core inflation pressures continued to trend higher, the last print at 4.2% y/y, which was a fresh cyclical high.
  • Growth rates remain elevated, but are expected to cool as we progress through 2023. The continued trend move down in the unemployment rate (latest at 3.6%), coupled with still elevated wages growth, +4.7% y/y for the manufacturing sector, should help keep domestic activity supported in the near term though.
  • For this meeting, with inflation pressures still persisting, the path of least resistance is expected to be a further 25bps hike. The statement is likely to be monitored for signs around future monetary policy shifts, particularly scope for a pause in the tightening cycle. We are likely getting closer to this point.
  • See our full preview here:
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