It also said private consumption growth is expected to slow to 5.7% this year from the 7% recorded last year on the back of subdued consumer sentiment.
This follows implementation of the Goods and Services Tax (GST), said the research house.
On Thursday, following the monetary policy committee meeting, Bank Negara Malaysia (BNM) kept the OPR unchanged at 3.25%.
Alliance-DBS said there are no strong convictions for the central bank to adjust the OPR in the short to medium term.
"If BNM were to cut the OPR in light of the subdued inflation and growth expectations, it would not be helpful to the ringgit exchange rate recovery, which has weakened against the US dollar by 8.2% year-to-date, and one of the steepest depreciations in the region.
"Given the heightened volatilities in global financial markets, it would take time for the uncertainties to be resolved," it added.
Growing divergence in international monetary policies and unresolved geopolitical issues, particularly the Greece debt crisis and bearish sentiment over the Malaysian economy on domestic related issues, are reasons for the volatility.
The research house believes that a moderation in growth is not an outright contraction as sentiment and economic growth is expected to pick up once the dust settles.- Bernama