OPR in focus

       THE Monetary Policy Committee (MPC) meeting is scheduled for this week, with most economists expecting the central bank to maintain the overnight policy rate (OPR) at 1.75%.

       According to a Bloomberg survey, all six economists polled expect Bank Negara to keep its policy rate unchanged at 1.75%.

       UOB Global Economics and Markets Research also expects no change but see the likelihood for the OPR to be raised twice this year, bringing it to 2.25% by end-2022.

       RHB Banking Group has maintained its view that Bank Negara will hike OPR by 25 basis points (bps) to 2% in the second half of this year, followed by 50bps in 2023.

       At the June 2022 MPC meeting, RHB expects the central bank to give guidance that the OPR normalisation cycle is imminent.

       At the upcoming meeting, it expects Bank Negara to remain on hold.

       Meanwhile, the Statistics Department is expected to release the producer price index for January 2022 today.

       The IHS Markit Manufacturing Purchasing Managers’ Index for February is due tomorrow.

       China’s direction

       CHINA’S Two Sessions will be the key focus for Asia and will provide clues about the main direction of government policies.

       UOB Global Economics and Markets Research anticipates China will prioritise efforts to stabilise economic growth this year against the backdrop of slowing momentum, ahead of the 20th Communist Party National Congress in autumn.

       UOB expects China to adopt a growth target of “above 5%” for 2022, compared to “above 6%” in 2021.

       Concurrently, monetary and fiscal policies will be kept accommodative to cushion the slowing economy. Other targets including inflation, money supply and credit growth as well as employment will likely be kept similar to the previous year.

       ING said it is not clear if the government will announce a gross domestic product (GDP) growth target in its work report. But as it did so last year, ING expects it to do so again.

       The research house believes this target could be 6% or more, which is consistent with GDP targets from local governments as it prepares for the Two Sessions..