KUALA LUMPUR, June 24 (Bernama) -- Kenanga Investment Bank Bhd has revised its 2025 inflation forecast downward to 2.0 per cent from 2.7 per cent (2024: 1.8 per cent), while expecting Bank Negara Malaysia (BNM) to keep the Overnight Policy Rate (OPR) unchanged.
In a research note issued today, the investment bank said headline inflation averaged 1.5 per cent in the first five months of the year.
“We expect it to tick up in July to around 1.5–1.7 per cent, driven by the expanded sales and service tax (SST) and Tenaga Nasional Bhd’s tariff restructuring.
“Further upward pressure is likely in August from the targeted RON95 fuel subsidy cuts, although the immediate impact may be limited to a narrow segment of the population,” it said.
For the August–December period, Kenanga said it expects inflation to range between 2.4 per cent and 3.0 per cent, bringing the full-year average for 2025 to 2.0 per cent.
“Risks remain skewed to the upside, mainly due to tariff uncertainty and geopolitical tensions.
“While market consensus anticipates one to two rate cuts by BNM in the second half of 2025, we maintain our view that the central bank will keep the OPR unchanged,” it added.
The investment bank said inflation is expected to rise gradually on the back of structural reforms, while economic growth remains resilient.
“The current rate level continues to attract foreign capital into the bond market.
“That said, should growth fall below 3.5 per cent and sequential quarter-on-quarter gross domestic product prints turn negative, the case for a rate cut would strengthen,” it said.
-- BERNAMA
