KUALA LUMPUR: Hong Leong Investment Bank (HLIB) research maintained its expectations for Bank Negara Malaysia (BNM) to keep the overnight policy rate at 3 per cent for the rest year, after the US Federal Reserve (Fed) kept its interest rates at 23-year highs last night.
In its latest policy decision the Fed kept its interest rates unchanged at 5.25-5.50 percent, citing a "lack of further progress" towards its two percent inflation target.
Separately, the Fed announced its plans to slow the pace of its balance sheet reduction starting in June 2024.
The Fed's action on interest rates is closely watched for its impact on the world's markets and currencies.
Emerging markets such as Malaysia especially stand to benefit from the Fed's rate cuts. The wide interest rate differentials between Malaysia and the US have been a key reason cited for the weakness in the ringgit.
HLIB research maintains its expectations for the Fed to cut interest rates by 25 basis points in December 2024.
The next Federal Open Market Committee meeting will be on 11/12 June 2024.