KUALA LUMPUR – CIMB Securities Sdn Bhd anticipates Bank Negara Malaysia (BNM) to cut the Overnight Policy Rate (OPR) by 25 basis points (bps) to 2.75% on July 9, 2025, by-passing the Monetary Policy Committee (MPC) meeting in May.
It said in a note today that the move would serve to allow the central bank to assess more incoming data, particularly related to external trade following the Liberation Day tariffs, including the first quarter of 2025 gross domestic product (GDP) announcement on May 16, April’s external trade (May 20) and May’s external trade (June 20) data.
“Trade negotiations with the United States (US) are still ongoing. As the implications for Malaysia from de-escalation versus reciprocal tariffs are wide, reservation of judgment is warranted. The July MPC meeting will also mark the end of the US’ 90-day tariff pause,” it said.
The bank also expects a more dovish tone and the MPC will explicitly acknowledge the downside risks that will weigh on the economy.
It noted that a recent statement by BNM Governor Datuk Seri Abdul Rasheed Ghaffour highlighted downside risks stemming from the current trade environment, suggesting that the official GDP growth forecast of 4.5–5.5 per cent may be revised downward.
“BNM currently projects gross exports to grow by 5.2 per cent in 2025, down from 5.7% in 2024. As of March, year-to-date export growth averaged 4.4 per cent. However, recent indicators — including the latest manufacturing purchasing managers’ index (PMI) — are showing further signs of weakness.”
It added that the delay in the sales and service tax (SST) expansion and the planned rationalisation of RON95 fuel subsidies — which will affect a portion of the population — are also expected to limit upward pressure on prices.
This supports the case for a monetary policy response, said CIMB Securities. – May 2, 2025