Maybank IB expects BNM to maintain OPR rate at 2.75 pct until year-end
Based on the briefing following last week's monetary policy committee meeting, Maybank IB's group chief economist, Suhaimi Ilias, said the investment bank believes that BNM is likely adopting a "one-cut-and-done" approach to rate cuts.
"At the moment, we don't expect any more cuts from BNM. I know they have flagged the downward revision to gross domestic product (GDP) growth at the end of this month. Currently, the official growth forecast for this year is 4.5 - 5.5 per cent.
"I think the message seems to be that it's not a major downward revision. So I guess that also suggests that BNM has factored in the rate cut impact on the economy," he said during a virtual media briefing on Maybank IB's Market Outlook for the second half of the year (2H 2025) today.
He said the interest rate cuts will be positive for consumer spending, which is the biggest component of ASEAN economies' GDP.
"Based on GDP numbers up to the first quarter of this year, private consumption is resilient in Malaysia, the Philippines and Indonesia, and retail sales for Vietnam as well as Singapore are improving as well," he said.
Suhaimi added that the investment bank has also maintained its GDP forecast for Malaysia at 4.1 per cent growth this year, down from last year's average of 5.1 per cent.
"We have already revised our GDP number twice. The first time was in April, following the (United States) Liberation Day announcement of a reciprocal tariff, where we had factored in the impact of a 24 per cent tariff come July 9, although that deadline has been extended to Aug 1 with the tariff at 25 per cent.
"It is not much of a difference in terms of the potential tariff that Malaysia will face come Aug 1. We still have some time left to negotiate and deal with the US to get to a better landing as far as tariff is concerned," he said.
While global uncertainties, particularly around the US trade policy and rising tariffs, have led to a downward revision from the initial 4.9 per cent GDP forecast, Suhaimi said Malaysia is expected to draw strength from resilient domestic demand and an ongoing investment upcycle.
"Key drivers include consumer spending, supportive government policy and capital investment activity across sectors such as manufacturing, industrial properties and infrastructure," he said.
Suhaimi said the bank remains optimistic about private consumption, projecting a 5.3 per cent growth in 2025, driven by household income support measures and continued investment momentum.
Meanwhile, Maybank IB has also maintained its FBM KLCI target at a base case of 1,660 this year, assuming further de-escalation of trade tensions and favourable tariff negotiations.
Its head of equity research, Lim Sue Lin, said for now, the investment bank projects the local benchmark index to hover around 1,550-1,600, although with good news, it could end at 1,660.
"The banking sector accounts for 50 per cent of earnings contribution to the KLCI. Even if you're looking at a 1.0 per cent earnings growth for the banks in 2025, it matters.
"We're expecting some recovery in 2026, likely with some clawback from credit costs, no more interest rate cuts and a bit more stability in the overall macro scenario. We do think that the banks remain a crucial driver to where the KLCI could go," she said.
On the ringgit outlook, Maybank's head of foreign exchange research, Saktiandi Supaat, said the local currency's outlook is mildly bullish.
"Overall, the ringgit will be at 4.10 by end-2025, buoyed by a softening US dollar, portfolio inflows and supportive domestic reforms.
"Despite rising foreign currency deposits among corporates, conversion into ringgit remains slow, offering potential upside," he said, adding that the ringgit is still fundamentally supported by fair valuation and structural policies.
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