Many of them believe that the rate hikes would continue for the remainder of the year amid rising inflation and BNM would continue tightening its policy in the upcoming monetary policy committee (MPC) meetings.

Kenanga Investment Bank said further rate hikes are expected largely due to the upward pressure on inflation amid rising food prices and a sustained recovery in domestic demand as reflected in the latest high frequency indicators such as unemployment rate, retail sales and imports.

This is also in tandem with global central banks’ monetary policy tightening cycle predominantly to combat rising inflation, it said.

“Nevertheless, it is unlikely that BNM would embark on an aggressive tightening cycle such as a 50 basis point (bps) hike unless the inflation rate overshot its target range driven by stronger than expected domestic demand.

“Likewise, we retain our forecast that BNM will gradually raise the OPR by 25 bps each in the September and November MPC meetings, with the final hike in the first quarter of 2023.

“Therefore, the policy rate is expected to settle at 2.75% by the end of this year and 3% for 2023,” it said in a research note.

CGS-CIMB Securities said BNM is expected to monitor economic developments going forward, especially if the growth in domestic demand is strong and unfettered amid the large subsidies.

“In that eventuality, a third rate hike this year could even be on the cards. Next year, we price in a further 50 bps in rate hikes, putting the end-2023 OPR at 3%,” it said.

AmBank Research expects BNM to adopt a more aggressive stance in a move to cool inflation and help support the weakening ringgit not just against the US dollar but also on cross rates.

“We gather that a one-off 50 bps hike seems highly unlikely. We are of the view that OPR will end at 2.5% to 2.75% in 2022, suggesting one to two more rate hikes, with another two hikes in 2023 to 3% and 3.25%,” it said.