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ANZ analysts note that the Malaysia’s headline CPI inflation came in at 0.2% y/y in March after negative prints in the previous two months, and as a result ANZ analysts continue to expect a single cut of 25bps in the Overnight Policy Rate (OPR) at Bank Negara’s next policy meeting on 7 May.

Key Quotes

“Transportation costs accounted for the bulk of the sequential increase, while a decrease in food prices provided some offset. Core inflation accelerated to 0.5% y/y in the month, but is still largely benign. We expect the headline inflation to hover around current levels until May. From June onwards, a low base effect (due to domestic tax policy changes last year) will likely prop up the annual rate. “

“Overall, inflation does not pose a constraint to policy easing, in our view. As such, we continue to expect a single cut of 25bps in the Overnight Policy Rate (OPR) at Bank Negara Malaysia’s next policy meeting on 7 May.”