CIMB Sees Possible OPR Cut In July Amid Growth Risks

KUALA LUMPUR, April 24 (Bernama) -- CIMB Investment Bank Bhd (CIMB) expects Bank Negara Malaysia (BNM) to cut the overnight policy rate (OPR) by 25 basis points to 2.75 per cent in July, citing growth concerns following tariffs imposed by the United States (US) on Malaysia and its key trading partners.

“We anticipate that BNM will cut the OPR on July 9, 2025, bypassing the May meeting of the Monetary Policy Committee (MPC) to allow the central bank to assess more macroeconomic data, particularly related to external trade following the Liberation Day tariffs, as well as ongoing trade negotiations with the US.

“The July MPC meeting also marks the end of the United States’ 90-day tariff pause,” it said in a note today.

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CIMB's forecast follows Malaysia’s advance gross domestic product (GDP) estimates, which slowed to 4.4 per cent year-on-year in the first quarter of 2025, down from 5.0 per cent in the fourth quarter of 2024. The latest reading came in slightly below CIMB’s forecast of 4.5 per cent and the Bloomberg consensus of 4.8 per cent.

“Given that headline inflation is currently below its 12-month average, this creates room for BNM to consider reducing the OPR.

“The expected rate cut is mainly aimed at addressing growth concerns linked to the US-imposed trade tariffs and broader global trade uncertainties,” it said.

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Meanwhile, Public Investment Bank Bhd (PIVB) maintains its OPR forecast at 3.00 per cent through 2025.

“In our view, the trajectory of monetary policy in second half 2025 will hinge on the timing and scale of domestic subsidy rationalisation, the outcomes of ongoing tariff negotiations, and further trade policy shifts by the US and China.

“With domestic activity broadly aligning with BNM’s baseline projections and downside risks to growth remaining, we expect the MPC to adopt a cautious stance and keep the policy rate unchanged in the near term,” it said.

PIVB also flagged the US Reciprocal Trade Tariff Act and potential retaliatory or sector-specific trade measures as sources of uncertainty clouding Malaysia’s external outlook.

“While BNM is expected to remain on hold barring any material shock to the growth or inflation path, incoming data on global trade disruptions and their spillovers to the domestic economy will be closely scrutinised,” PIVB said.

It added that recent remarks by the BNM Governor reinforced the view that monetary policy alone cannot address trade-related shocks, and pointed to the availability of other policy tools to manage external pressures.

Kenanga Investment Bank Bhd, meanwhile, maintains its 2025 inflation forecast at 2.7 per cent, incorporating the anticipated rationalisation of RON95 fuel subsidies.

“While Malaysia is largely insulated from tariff-induced inflation, we highlight domestic policy shifts—such as the rationalisation of RON95 fuel subsidies, the new electricity tariff structure under RP4, and a potential nationwide water tariff hike, as key risks to inflation control.

“If the subsidy rationalisation is delayed, we would revise our 2025 Consumer Price Index (CPI) forecast downward to 1.8 per cent,” it said.

Maybank Investment Bank Bhd has revised its 2025 inflation forecast to 2.0 per cent, from 2.3 per cent previously, citing factors such as a potential review of electricity tariffs, the RON95 subsidy rationalisation, and changes in foreign labour costs.

The investment bank warns that global commodity price volatility, shifting international trade policies, and the US Reciprocal Trade Tariff Act could contribute to mounting inflationary pressures.

“With these mixed signals, analysts agree that BNM's policy response will continue to depend on evolving external conditions and domestic policy developments. The July MPC meeting will be crucial in determining whether further monetary easing is necessary to support Malaysia's economic growth,” it added.

-- BERNAMA