Published on 02 Mar 2021.
RAM expects Bank Negara Malaysia (BNM) to maintain the Overnight Policy Rate (OPR) at 1.75% at its next policy meeting on 4 March 2021. Current policy settings are deemed accommodative enough to support the country’s nascent economic recovery.
We expect Malaysia’s near-term growth outlook to improve in line with the accelerated pace of vaccinations in advanced economies. Healthier global conditions bode well for more than 60% of total exports this year, including that for oil & gas, palm oil and electrical & electronics.
That said, domestic demand is still fragile given the scale of last year’s economic losses and downbeat consumer confidence. Until herd immunity is achieved by February 2022, with about 80% of the population immunised, certain services sectors – including retail, food and beverages, leisure and hospitality - may remain vulnerable to transient setbacks.
We expect BNM to deploy more targeted easing measures if the pace of recovery falls below the anticipated trajectory.
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