BNM expected to maintain rates but signal openness to policy easing: Maybank IB

BANK Negara Malaysia (BNM) is expected to hold its Overnight Policy Rate (OPR) at 3.00 per cent during its Monetary Policy Committee (MPC) meeting on 8 May, while signalling a readiness to ease if economic conditions deteriorate, according to Maybank Investment Bank (Maybank IB).

In a research note issued today, Maybank IB said the central bank is likely to adopt a more dovish tone in response to external uncertainties, particularly those arising from the United States' tariff measures and the broader global economic outlook.

“We expect BNM to keep rates unchanged for now but adopt a dovish stance, indicating its preparedness to ease should the economic data turn,” the bank said. It identified July as the earliest possible window for a rate cut, although September or November could be considered depending on the pace of economic weakening.

The investment bank also suggested that a series of rate cuts is unlikely under current conditions. “In the absence of an economic or financial crisis, BNM tends to move at a measured pace. A more aggressive easing path is not warranted at this juncture,” it said.

Maybank IB highlighted the ongoing negotiations and unpredictability surrounding President Donald Trump’s trade and tariff policies. “Policymakers are carefully weighing downside risks to growth against potential upside risks to inflation,” the note added.

Given that monetary policy tends to work with a delay, Maybank IB expects the most probable path forward to be a single 25 basis point cut in the second half of 2025, followed by a pause to reassess conditions before taking further action.

The upcoming MPC meeting is expected to draw more market attention than usual, having followed a period of relative stability in policy settings since the last rate increase in May 2023.

“Trade tensions have shifted the balance of risks for Malaysia’s growth and inflation outlook,” Maybank IB said.

As for external influences, the investment bank noted that US Federal Reserve decisions are not likely to directly shape BNM’s policy path.

“While Fed futures suggest a 50–55 per cent chance of a cut by June and fully price in at least one cut by July, BNM’s decisions remain grounded in domestic data and how global developments affect Malaysia,” it said. - May 5, 2025