Research firms expects Bank Negara Malaysia (BNM) to keep the Overnight Policy Rate (OPR)

unchanged at 3.0 per cent for the rest of 2023.HLIB said following the stronger-than-expected gross
domestic product performance in the first quarter of 2023 (1Q 2023) at 5.6 per cent year-on-year
(YoY), the Malaysian economy's momentum has slowed in recent months as exports contracted on
weaker external demand.Nevertheless, the deterioration in trade data was within BNM's
expectation, it said."While the growth outlook is subject to downside risks stemming from external
developments, upside risks mainly stem from domestic factors including higher-than-expected
tourism activity and fast project implementation," it said in a note today.CGS-CIMB believed the
balance of risk to growth is now tilting towards the downside, with the likelihood of a global
slowdown appearing more pronounced than previously expected, especially given the muted impact
from China's reopening.The recent softening in exports might shift BNM's narrative towards being
more neutral, at least until exports start to show signs of improvement, it reckoned.BNM kept the
OPR at 3.00 per cent at its July 5-6 Monetary Policy Committee (MPC) meeting, after raising by 25
basis points (bps) at the May 2-3 meeting.Similarly, Maybank Investment Bank Bhd projected OPR
would be kept at 3.0 per cent, with cautiously constructive view on growth and inflation."For the
remainder of this year, the economy will be driven by resilient domestic demand as favourable
labour market conditions, especially in the domestic-oriented sectors, underpinned consumer
spending plus rebounds in tourist arrivals and thus tourism-related activities, on top of progress in
multi-year infrastructure projects supporting investment activity," it said.Meanwhile, Public
Investment Bank Bhd expects BNM to adopt a cautious approach, closely monitoring significant
developments in central bank policies."In the event that Malaysia's domestic economy exceeds
expectations, it is not implausible forthe central bank to consider optimising its monetary tools by
gradually normalising the Statutory Reserve Requirement to 3.00 per cent in the first half of
2024."However, any changes to the current monetary policy stance will thus be subject to rigorous
evaluation based on further improvements in macroeconomic conditions, particularly the ongoing
recovery of the labour market and a sustained expansion of domestic demand and pace of
inflationary pressures," it added.