HLIB Sees BNM Cutting OPR By 25 Bps In 2H 2025

KUALA LUMPUR, July 1 (Bernama) -- Bank Negara Malaysia (BNM) is expected to maintain a cautious stance and cut the overnight policy rate (OPR) by 25 basis points in the second half of 2025, Hong Leong Investment Bank Bhd (HLIB) said, citing mixed monetary signals, persistent trade policy uncertainty, and subdued inflation.

HLIB said global trade policy uncertainty is likely to remain elevated as Malaysia nears the end of its 90-day negotiation with the United States.

“Protectionist risks remain elevated, with the 10 per cent universal tariffs expected to stay in place,” it said in a note today.

HLIB said monetary indicators were mixed in May, with narrow money supply (M1) accelerating to 4.4 per cent year-on-year from 3.8 per cent in April.

However, broad money supply (M3) eased to 2.7 per cent from 3.2 per cent.

Leading loan indicators were also mixed—loan approvals rose, applications moderated and disbursements declined.

HLIB added that foreign investors turned net buyers of local bonds and equities during the month.

“Foreigners’ appetite for Malaysian bonds continued to rise in May (+RM12.9 billion), as bond investors fled from the US to emerging market debt—a trend further reinforced by positive developments in Malaysia-US trade talks and a stronger ringgit.

“Simultaneously, foreigners turned net buyers of equities (+RM1.0 billion) after seven consecutive months of net selling,” it said.

Meanwhile, foreign deposits posted steady growth of 3.5 per cent year-on-year, unchanged from April.

-- BERNAMA