KUALA LUMPUR: Bank Negara Malaysia's (BNM) decision to maintain the overnight policy rate (OPR) will assist small and medium enterprises (SMEs) to evaluate their financial health and build cash reserve to prepare for a potential slowdown this year, expected to mainly arise from external fronts.

BNM maintained its OPR at 2.75 per cent following its first 2023 Monetary Policy Committee (MPC) meeting on Thursday.

In a statement today, SME Bank group president/chief executive officer Datuk Dr Aria Putera Ismail said the bank is committed to serve SMEs' financial needs.

"The potential removal of blanket fuel subsidy is seen as a key upside risk for inflation pressure depending on its implementation timeline and roll-out mechanism.

"Hence, it is crucial for SMEs to be proactive in forecasting, budgeting, and being agile to changing market conditions to ensure a healthy cash flow during a higher rate environment," he said.

Meanwhile, SME Bank chief economist Lynette Lee opined that BNM is expected to pause the OPR at2.75 per cent in anticipation that headline and core inflation will continue to ease in 2023.

Core inflation stood at 4.1 per cent in December 2022 while headline inflation has declined to 3.8 per cent from its high of 4.7 per cent in August, Lee said.

"Knock-on effects from China's reopening, global commodity price developments and changes in domestic subsidy policies may put pressure on inflation.

"As such, any future OPR hikes will be data-driven," she added.

-- BERNAMA