National Bank holds six monetary policy meetings (MPC) each year, during which it will decide whether to adjust the overnight policy rate (OPR).
The Bank’s next monetary policy meeting will take place on 2 and 3 November and will be the last opportunity for the Bank to raise interest rates this year. National Bank has already raised interest rates by 0.25% each in May, July and September.
If domestic inflation continues to be high, RM continues to depreciate and the Federal Reserve continues to raise interest rates, then the National Bank may also raise interest rates by another 0.25% in November, by which time our Overnight Policy Rate (OPR) will be at 2.75% p.a.
Our inflation in July increased by 4.40% compared to the same month last year and the NBS is expected to release its inflation index for August this month and it is believed that the inflation rate will not be too optimistic. In order to curb domestic inflation, the NBS has no choice but to raise interest rates in response.
In addition, the Federal Reserve will hold another interest rate meeting on 21 September and a 0.75% rate hike cannot be ruled out. Inflation in the US rose by 8.3% year-on-year in August, which has driven the Fed to continue to raise interest rates strongly.
With the Fed raising interest rates, there will be a stronger US dollar and a devaluation of the Malaysian currency, and the National Bank will be forced to choose to continue raising interest rates in November.
