Bank Negara Malaysia (BNM) is expected to maintain its benchmark overnight policy rate at 3.00 percent in the upcoming policy meeting scheduled to be held in December, also the last such meeting this year, following better-than-expected economic growth performance during the third quarter of this year.

Malaysia’s better-than-expected Q3 economic performance, particularly the resilience of private consumption, reduces the need for monetary easing. An uncertain external environment and the weakening in the MYR complicate the monetary policy outlook. BNM’s accompanying statement regarding these issues will be closely watched.

Since the September meeting, economic conditions have evolved in line with BNM’s expectations. As mentioned in their last monetary policy statement, domestic demand conditions are expected to remain stable despite weak external demand conditions and inflation is treading the lower bound of the 2-3 percent y/y range in 2016, ANZ reported.

The outlook for private domestic demand and economic growth has improved, with Budget 2017 supportive of firmer consumption, helping to offset likely slowing in public investment due to the recent reduction in development expenditure.

"BNM surprised with a July rate cut partly due to uncertainty created by the Brexit vote. We do not expect a similar reaction this time, partly as Malaysia’s GDP growth has stopped sliding, but mainly due to the depreciation pressure on MYR," the report said.