MNI BNM Preview - September 2023: Lower Growth & Inflation = On Hold

EXECUTIVE SUMMARY:

• Tomorrow’s BNM policy meeting outcome looks a fairly straight forward on hold decision at this stage. This is our firm bias and also the sell-side consensus. All 21 economists surveyed by Bloomberg look for the policy rate to hold steady at 3.00%.
• Local data outcomes continue to argue for steady policy. On the inflation front, we continue to see a loss of momentum in terms of both headline and core. The authorities are likely to be wary of a rebound in food prices. However, this is likely to be a watch point, rather than something that turns the BNM more hawkish. In the July CPI print, 11 out of the 12 sub-categories recorded softer or the same y/y momentum compared with June.
• On the growth front, Q2 GDP was 1.5% q/q, but eased back to 2.9% y/y, versus 5.6% prior. Private spending momentum slowed further, and the export drag rose, while government spending and investment were positive offsets. Growth momentum is well below 2022 highs. The weaker MYR FX may be a source of renewed concern, but the MYR NEER is comfortably above 2023 lows.
• See our full preview here:

BNM Preview - September 2023.pdf