KUALA LUMPUR, Oct 20 — CIMB Investment Bank Bhd (CIMB IB) expects Bank Negara Malaysia (BNM) to raise the overnight policy rate (OPR) by 25 basis points to 3.00 per cent in March 2027 from 2.75 per cent, ahead of core inflation rising in the second half of 2027 (2H 2027).
It said the OPR hike would be pre-emptive, with near-term inflation still contained.
“Persistent price pressures could bring the (OPR hike) move forward to January 2027, while softer domestic activity could delay it until May 2027,” the investment bank said in a research note today.
CIMB IB forecast core inflation rising from 2.0 per cent in the first quarter of 2027 (1Q 2027) to 2.5 per cent in 3Q 2027, before easing to 2.4 per cent in 4Q 2027.
The additional income and wage measures contribute 0.27 percentage points (ppt) to core inflation in 4Q 2027, against a forecast of 2.1 per cent without these effects.
“The pickup in core inflation will be less apparent in headline inflation, which we forecast at 1.8 per cent in 2027. The additional income and wage measures would contribute 0.10 ppt annually, offset by the anticipated fall in energy prices,” it said.
Meanwhile, Budget 2027 provides larger support than expected to households, particularly through personal tax relief, special financial assistance and employer-funded wage increases.
“We estimate RM11.5 billion in additional household income and support in 2027, with wage measures accounting for nearly half of the total. The additional income could generate RM8.4 billion in consumption spending, with approximately four-fifths concentrated in 2H 2027.
“In addition, we estimate an uplift of 0.5 ppt to private consumption growth and 0.2 ppt to gross domestic product growth (2027: 4.7 per cent),” CIMB IB said.
