MAYBANK Investment Bank Bhd (Maybank IB) saw “hawkish” pivots among ASEAN central banks after the US Federal Reserve (US Fed) front-loading its interest rate hikes and sent fed funds rate (FFR) to higher peak level than the last interest rate hikes cycle’s peak of 2.5%.
In a research note today, chief analyst Suhaimi Ilias said US Fed chairman Jerome Powell also indicated a 50 to 75 basis points rate hike for the next Federal Open Market Committee (FOMC) meeting on July 26 to 27.
He said the Bank Negara Malaysia (BNM) is expected to increase the overnight policy rate (OPR) by 25 basis points in the next Monetary Policy Committee (MPC) meeting from July 5 to 6 after the 25 basis points hike at the May 10 to 11 meeting.
The analyst said there is also the prospect of another 25 basis points hike by the end-2022 to raise the OPR to 2.5% versus the previous view of another 25 basis points hike later in the second half of 2022 to 2.25%.
“We maintain our forecast of OPR reaching 3% next year,” he said.
He said the Bangko Sentral ng Pilipinas (BSP) also signalled interest rate hikes this month and August 2022, following the 25-basis-point increase to 2.25% last month, and going “data-dependent” afterwards.
“Our BSP’s policy interest rate forecast currently is 2.75% this year and 4% next year with upside risk of ‘front-loading’ this year given the above-mentioned signal by BSP on its near-term policy rate trajectory,” it said.
Meanwhile, he said Maybank IB revised forecast on Bank of Thailand’s (BoT) benchmark interest rate, expecting a 50-basis-point hike to one per cent by end-2022 and another 50-basis-point increase to 1.5% in 2023 versus 25-basis-point hike this year and 50-basis-point hike next year previously. – June 30, 2022
