Sell-Side Views Post Yesterday's On Hold Outcome - Steady In 2024

The broad sell-side consensus of a steady BNM outlook in 2024 was maintained post yesterday's on hold outcome, see below for more details.

J.P. Morgan: "BNM’s policy reaction function has tended to focus more on the prospective growth path, and in that context, responds more to core inflation than headline inflation. Although we have penciled in a rise in headline CPI from subsidy liberalization later this year, we expect core inflation should remain well anchored. This view presumes that the negative real income impact will restrain discretionary expenditure and thus pricing power. Such an outcome would mirror the experience from 2016/2017 and 2021. Expecting BNM to hold through 2024 given core CPI path - Given the divergent path for core and headline inflation, we thus expect that BNM will remain on hold through 2024 unless demand conditions remain more resilient than we anticipate, with spillover to pricing power"

Goldman Sachs: In terms of forward guidance, the statement reiterated that the current level of monetary policy "remains supportive of the economy" and "consistent with the current assessment of the inflation and growth prospects". In our view, the tone in today's meeting statement is broadly similar to the November meeting's despite slower-than-expected growth in Q4 last year. Going forward, we continue to expect BNM to keep the OPR rate unchanged at 3.0% through end-2024. A more aggressive subsidy rationalization than we currently expect is an upside risk to our headline inflation and BNM policy rate forecasts in 2024. The next BNM meeting is scheduled on March 6-7.