However, fiscal policy shifts and external risks, such as geopolitical tensions, could still influence the central bank's stance, it said in a research note today.
Meanwhile, the investment bank revised its year-end forecast for the ringgit versus US dollar to 4.25 from 4.42 previously, premised on Malaysia's favourable yield differentials, the United States (US) Federal Reserve's (Fed) interest rate cuts, and China's economic recovery.
"As anticipated, the market has adjusted its expectations, now only pricing in two 25 basis point cuts by the Fed this year, following stronger-than-expected US September labour data.
"While domestic fundamentals should continue to underpin the ringgit, we remain vigilant of external risks, particularly the prospect of a sharper US economic downturn, election-related uncertainties, and geopolitical tensions," said Kenanga.
-- BERNAMA
