BNM Likely To Raise OPR By 25 Basis Points In 2027 - Analysts

By Siti Radziah Hamzah

KUALA LUMPUR, Nov 6 (Bernama) -- A potential 25-basis-point hike in the Overnight Policy Rate (OPR) to 3.0 per cent is expected in the first quarter of 2027 (1Q 2027) amid resilient economic growth and Bank Negara Malaysia’s (BNM) hawkish tone on inflation, said market observers. 

Kenanga Investment Bank Bhd expects BNM to deliver a single 25-basis-point hike to 3.0 per cent in 1Q 2027 , then stay on hold.

The investment bank said with most major central banks tightening, a stale OPR risks widening rate differentials, adding pressure on the ringgit, while a modest pickup in 2027 inflation would erode the real OPR.

It added that inflation remains benign at 1.8 per cent in September, but persistent geopolitical tensions warrant a measured shift towards more neutral policy settings.

“That said, BNM is likely to retain a data-dependent approach and will assess the evolution of inflationary pressures before proceeding with any policy adjustment,” the investment bank said in a research note today.

On Thursday, BNM’s Monetary Policy Committee (MPC) kept the OPR at 2.75 per cent at its sixth and final meeting of the year. 

Kenanga Investment Bank maintained its 2026 gross domestic product (GDP) growth forecast at 5.3 per cent, up from 5.2 per cent in 2025, backed by resilient domestic demand, robust services and sustained investment in artificial intelligence (AI) and digital infrastructure.

It added that electrical and electronics demand from AI and data centre expansion should continue to support manufacturing, while tourism adds a further tailwind.

Growth should moderate in 4Q 2026 as front-loading fades and trade momentum normalises, said the investment bank.

“Still, firm labour market conditions and continued investment should cushion external headwinds. Looking ahead, we maintain our GDP growth forecast at 5.0 per cent in 2027. The high 2026 base and slower manufacturing point to softer momentum in 2027, but domestic fundamentals remain supportive,” it added.

Meanwhile, Apex Securities Bhd expects a 25-basis-point hike to 3.0 per cent in January 2027, bringing forward its previous call for a hike in 2Q 2027 as it sees little reason for the central bank to wait because the key hurdle for a hike has eased.

The case for a rate hike is strengthening, with 3Q 2026 growth exceeding expectations at 5.3 per cent and year-to-date growth expected to reach 5.5 per cent, it said.

It noted that BNM appeared increasingly comfortable that the economy was adapting well to supply constraints from geopolitical tensions. Potential cost pass-through to consumers could also prompt BNM to act earlier to contain the risk of second-round effects on inflation.

“BNM could alternatively wait until March to assess the growth momentum in 1Q 2027, but we think an earlier move in January is more likely given the shift in the balance of risks,” it added. 

Concerns over geopolitical tensions were also easing, adding that BNM has adopted a more hawkish stance on inflation, citing the risk of higher commodity prices being passed on to consumers.

-- BERNAMA