SRR, Rate Moves Within Expectation: MIDF

Published: 2011/03/14

Bank Negara Malaysia (BNM)'s decision to hold the overnight policy rate (OPR) at 2.75 per cent and raise the statutory reserve (SRR) requirement by 100 basis point (bps) to two per cent is within market expectation, says MIDF Research.

With the latest move, between RM6 billion and RM7 billion in surplus will be absorbed from the financial system.

In a statement today, MIDF Research foresees the central bank would hold the OPR at 2.75 per cent in the second quarter but raise the policy rate by 25 bps in the third and fourth quarter, bringing the cumulative OPR hike to 3.25 per cent this year.

" Looking ahead in calendar year 2012, we expect BNM to raise OPR by another 25 bps in the first calender year 2012 and thereafter hold rates to the rest of 2012 at 3.5 per cent," it said.


It added inflationary pressure, arising from rising commodity prices and crude oil, was expected to have a knock-on effect on domestic inflation through cost-push pressure. -- Bernama



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