Kuala Lumpur: CIMB Securities Sdn Bhd anticipates that Bank Negara Malaysia (BNM) will reduce the Overnight Policy Rate (OPR) by 25 basis points to 2.75 percent on July 9, 2025, bypassing the Monetary Policy Committee (MPC) meeting scheduled for May.

According to BERNAMA News Agency, CIMB Securities stated in a note that this decision would allow BNM to evaluate additional data, particularly regarding external trade following the Liberation Day tariffs. This includes key economic indicators such as the first quarter of 2025 gross domestic product (GDP) announcement on May 16, and external trade data for April and May, expected on May 20 and June 20, respectively.

The note highlighted that ongoing trade negotiations with the United States are a significant factor. The outcomes of these negotiations, whether they result in de-escalation or reciprocal tariffs, have broad implications for Malaysia. The July MPC meeting will coincide with the conclusion of the US' 90-day tariff pause, adding to the importance of the timing.

Furthermore, CIMB Securities foresees a more cautious approach in the MPC's communications, with an explicit acknowledgment of the economic challenges. A recent statement by BNM Governor Datuk Seri Abdul Rasheed Ghaffour emphasized the risks associated with the current trade environment, suggesting a potential downward revision of the GDP growth forecast, initially set at 4.5-5.5 percent.

BNM's current forecast anticipates gross exports to increase by 5.2 percent in 2025, down from 5.7 percent in 2024. As of March, the year-to-date export growth averaged 4.4 percent, but recent indicators, including the manufacturing purchasing managers' index (PMI), are showing signs of further economic weakening.

CIMB Securities also noted that delays in expanding the sales and service tax (SST) and the rationalization of RON95 fuel subsidies-affecting a segment of the population-are expected to limit inflationary pressures. This scenario supports the need for a monetary policy adjustment, they concluded.