Barefoot Investor: BNM likely to hike OPR by 25bps to 3.25pct, says UOB economist - Update news at 12:26pm (6th July, 2011)

Bank Negara Malaysia is likely to raise the overnight policy rate (OPR) by another 25 basis points to 3.25% at its monetary policy meeting on Wednesday, July 7.

UOB economist Jimmy Koh said on Wednesday he also expected the statutory reserve requirement (SRR) to be raised during the meeting to 4%.

In a recent report, CIMB Economics Research maintained its expectations that the OPR would be also raised by 25 basis points to 3.25% but the timing would be a close call between July and September.

“Compared to the previous rate hike in May, we think the confluences of external headwinds have tilted the balance of risk towards the downside for the growth outlook,” CIMB Research said.

At the MPC meeting on May 5, BNM decided to raise the OPR by 25 basis points to 3%. The floor and ceiling rates of the corridor for the OPR were correspondingly raised to 2.75% and 3.25% respectively.

The central bank had also increased the SRR ratio from 2% to 3%, effective from May 16. It had said the decision to raise the SRR was a pre-emptive measure to manage the significant build-up of liquidity, which might result in financial imbalances and create risks to financial stability. (The Edge Malaysia)


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