KUALA LUMPUR: Bank Negara is not likely to raise the Overnight Policy Rate at its meeting this evening.
Economists said the central bank's monetary policy committee meeting will keep the rate unchanged at 3.00 per cent given the growth downside risk with the subdued inflation.
Bank of America Merrill Lynch said although inflation has been edging higher to 2.6 per cent in September from 1.9 per cent in August, it is largely one-off because of the 10 per cent fuel price hike.
CITI said there is limited evidence of second round inflation pressures.
"With the September fuel price hike, BNM's implicit 3 per cent tolerance inflation threshold may be reached by year end."
With the balance of risks tilted towards growth, uncertainties over the outlook suggest that Bank Negara will not be in a hurry to hike.
"Governor Tan Sri Dr Zeti Akhtar Aziz's comments that credit growth has moderated to a sustainable pace and that there are no asset bubbles forming suggest that macroprudential measures will likely remain the preferred response for such issues."
CITI now expects the rate to be hiked in the second quarter of 2014.
HSBC Bank also expects tightening in the second half of next year.
It said further subsidy rationalisation, particularly on fuel, could eventually push inflation beyond the central bank's 2 to 3 per cent comfort range.
Jeff Ng of Standard Chartered Bank said BNM is comfortable with the current rate despite higher inflation due to the fuel price hikes.
"It is likely to remain mindful of risks to economic growth, even though external demand should help to improve growth rates in the second half of 2013 and 2014.
"Inflation remains manageable despite fuel price hikes, subsidy cuts and a firm domestic economy."
StanChart expects inflation to average 2.3 per cent in 2013 and 3.9 per cent in 2014.
OPR OUTLOOK FOR NOVEMBER 7 (%)
Affin Investment Bank (3.00)
AmResearch (3.00)
Bank of America Merrill Lynch (3.00)
BIMB Securities (3.00)
CITI (3.00)
Credit Suisse (3.00)
HSBC Bank (3.00)
Kenanga Investment Bank (3.00)
Maybank Investment Bank (3.00)
MIDF Research (3.00)
Nomura Research (3.00)
RHB Research (3.00)
Standard Chartered Bank (3.00)
UOB Bank (3.00)
Economists said the central bank's monetary policy committee meeting will keep the rate unchanged at 3.00 per cent given the growth downside risk with the subdued inflation.
Bank of America Merrill Lynch said although inflation has been edging higher to 2.6 per cent in September from 1.9 per cent in August, it is largely one-off because of the 10 per cent fuel price hike.
CITI said there is limited evidence of second round inflation pressures.
"With the September fuel price hike, BNM's implicit 3 per cent tolerance inflation threshold may be reached by year end."
With the balance of risks tilted towards growth, uncertainties over the outlook suggest that Bank Negara will not be in a hurry to hike.
"Governor Tan Sri Dr Zeti Akhtar Aziz's comments that credit growth has moderated to a sustainable pace and that there are no asset bubbles forming suggest that macroprudential measures will likely remain the preferred response for such issues."
CITI now expects the rate to be hiked in the second quarter of 2014.
HSBC Bank also expects tightening in the second half of next year.
It said further subsidy rationalisation, particularly on fuel, could eventually push inflation beyond the central bank's 2 to 3 per cent comfort range.
Jeff Ng of Standard Chartered Bank said BNM is comfortable with the current rate despite higher inflation due to the fuel price hikes.
"It is likely to remain mindful of risks to economic growth, even though external demand should help to improve growth rates in the second half of 2013 and 2014.
"Inflation remains manageable despite fuel price hikes, subsidy cuts and a firm domestic economy."
StanChart expects inflation to average 2.3 per cent in 2013 and 3.9 per cent in 2014.
OPR OUTLOOK FOR NOVEMBER 7 (%)
Affin Investment Bank (3.00)
AmResearch (3.00)
Bank of America Merrill Lynch (3.00)
BIMB Securities (3.00)
CITI (3.00)
Credit Suisse (3.00)
HSBC Bank (3.00)
Kenanga Investment Bank (3.00)
Maybank Investment Bank (3.00)
MIDF Research (3.00)
Nomura Research (3.00)
RHB Research (3.00)
Standard Chartered Bank (3.00)
UOB Bank (3.00)
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