Kuala lumpur: Bank Negara Malaysia (BNM) is expected to maintain a cautious stance and cut the overnight policy rate (OPR) by 25 basis points in the second half of 2025, Hong Leong Investment Bank Bhd (HLIB) said, citing mixed monetary signals, persistent trade policy uncertainty, and subdued inflation.

According to BERNAMA News Agency, HLIB noted that global trade policy uncertainty is likely to remain elevated as Malaysia nears the end of its 90-day negotiation with the United States. The bank highlighted that protectionist risks remain high, with the 10 per cent universal tariffs expected to persist.

HLIB observed that monetary indicators were mixed in May. The narrow money supply (M1) accelerated to 4.4 per cent year-on-year from 3.8 per cent in April, while the broad money supply (M3) eased to 2.7 per cent from 3.2 per cent. Additionally, leading loan indicators showed a varied performance, with loan approvals rising, applications moderating, and disbursements declining.

The bank added that foreign investors turned net buyers of local bonds and equities during the month. Foreign interest in Malaysian bonds increased significantly in May by RM12.9 billion as investors moved from US to emerging market debt, a trend bolstered by positive developments in Malaysia-US trade talks and a stronger ringgit. Concurrently, foreign investors became net buyers of Malaysian equities, marking an end to seven consecutive months of net selling, with an increase of RM1.0 billion.

Moreover, foreign deposits showed consistent growth of 3.5 per cent year-on-year, unchanged from the previous month of April.