Top Story : Interest rates – BNM begins to normalise monetary conditions by raising its key policy rate Economic Highlights (published 5 Mar 2010)
- As expected, Bank Negara Malaysia’s (BNM) Monetary Policy Committee (MPC) raised the Overnight Policy Rate (OPR) by 25 basis points to 2.25% on 4 March. This was the first increase in more than a year, after leaving it unchanged for the seventh time and since February 2009, in a move to normalise interest rates from the current unprecedented low levels to prevent financial imbalances from building up. This is especially the case given that the economy has turned around in the 4Q of last year and at a stronger-than-expected pace, and is expected to improve further in 2010.
- Following a rate hike by the Central Bank today, we believe it will do it again, albeit at a measured pace. As a result, we expect Bank Negara to raise its OPR by another 25 basis points in July 2010 to 2.5% and the OPR will likely stay at this level until the end of the year.
RHB Equity 360° (Economy, Banks, Market; Technical: Maybank) - 05/03/2010
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