AMBANK (M) Bhd expects another 25 basis points (bps) cut in the Overnight Policy Rate (OPR) as inflation is expected to stay weak in 2020.
The benchmark index currently stands at 2.50%, after being slashed by 25 bps on March 3 – the second reduction in less than three months. The rate was the lowest since March 2011.
The next Bank Negara Malaysia Monetary Policy Committee meeting is scheduled for May 5.
AmBank said inflation is more likely to average around +0.3% with room to tread into a deflationary reading of -1.5%.
Should the headline inflation fall into deflation, it would be the first since 1983, it added.
“Inflation is projected to stay weak in 2020 due to lack of overall pressure from cost-push and demand-pull inflation.
“There is not much cost pressure, partly due to weak commodity prices, added with an economy that is plagued with excess capacity,” AmBank said in a research note today.
March’s headline inflation fell into deflation for the first time since February 2019.
It fell by 0.2% year-on-year (yoy) from +1.3% yoy in February, a tad higher than AmBank’s expectation of -0.3% while market consensus stood at -0.1%.
This brings inflation to average at 0.9% yoy in the first quarter of 2020. — April 23, 2020, Bernama
