OPR likely to remain unchanged, ringgit forecast at RM4.25 by year-end

OPR likely to remain unchanged, ringgit forecast at RM4.25 by year-end

Fiscal policy shifts and external risks could still influence the central bank’s stance, says analyst.

Kenanga IB has revised its year-end forecast for the ringgit versus the US dollar to RM4.25 from RM4.42.
PETALING JAYA:
Bank Negara Malaysia (BNM) is likely to keep the overnight policy rate (OPR) unchanged for the next 12 to 15 months, with inflation pressures subdued and the economic outlook stable, said Kenanga Investment Bank Bhd (Kenanga IB).

However, fiscal policy shifts and external risks, such as geopolitical tensions, could still influence the central bank’s stance, it said in a research note today.

Meanwhile, the investment bank revised its year-end forecast for the ringgit versus the US dollar to RM4.25 from RM4.42, previously, based on Malaysia’s favourable yield differentials, the US Federal Reserve’s (Fed) interest rate cuts, and China’s economic recovery.

“As anticipated, the market has adjusted its expectations, now only pricing in two 25 basis points cuts by the Fed this year, following stronger-than-expected US September labour data.

“While domestic fundamentals should continue to underpin the ringgit, we remain vigilant of external risks, particularly the prospect of a sharper US economic downturn, election-related uncertainties, and geopolitical tensions,” said Kenanga IB.

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