Status quo of low OPR until June 2026: Expert
CIMB Bank Bhd chief investment office Ng Boon Hoa said Bank Negara appears to be taking a cautious approach in supporting the nation's economic growth.
This is particularly in light of the risks from a potential global slowdown and the uncertainty surrounding Malaysia's yet-to-be-finalised tariff negotiations, he added.
"We expect Bank Negara to maintain the current interest rate at 2.75 per cent at least until mid-2026.
"It is rather difficult to make precise projections for 2027 and beyond, as external factors are constantly changing," he said during the presentation of CIMB's Asean Market Outlook in conjunction with the bank's Asean media day here today.
According to Ng, the recent rate cut was a preemptive measure to absorb near-term uncertainties in economic growth.
"If the current rate successfully spurs growth, Bank Negara is likely to remain comfortable with this level. Rate hikes would only be considered if there is significant strengthening in growth, possibly in 2027 or 2028, and even then, likely only once or twice," he said.
Commenting on foreign fund flows, Ng said the domestic bond market is currently benefiting from these inflows, which in turn enhances liquidity in the financial system and supports lower borrowing costs.
However, he cautioned that excessive inflows could risk contributing to inflationary pressures over the longer term and would require close monitoring by the monetary authorities.
"Foreign funds can flow in and out quickly. We need to be cautious. The ringgit has shown some strengthening thanks to these inflows, but currency movements can change abruptly," he said.
He pointed to the one per cent depreciation of the ringgit against the US dollar over the 20-day period since the end of June as an example of the uncertainties facing the local market.
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