The research house said BNM is unlikely to hike the OPR, which is anticipated to stay at 3%, primarily to support the ringgit as the current rate is not seen as affecting the growth and inflation outlook.

“The ringgit has had some reprieve since the start of March after underperforming in the first two months of 2024. The ringgit’s weakness likely limits BNM’s room to cut rates to support growth,” it said in a research note.

On BNM’s financial markets committee’s recent statement, the research unit said the coordination with GLCs and investment companies is likely preferred over a tweak to monetary policy by BNM to address foreign exchange weakness.

“Growth is currently soft in Malaysia, the economy ended 2023 on a soft note, with the fourth quarter gross domestic product contracting 2.1% quarter-on-quarter.

“Core inflation also eased further to 1.8% year-on-year in January, although upcoming changes to administrative taxes and subsidy rationalisation could add to inflation,” it added.

The central bank is expected to announce its monetary policy decision on March 7.