"My guess is that he's going to come back," Murphy said Wednesday at a Milwaukee Press Club luncheon. "The team has gotten better around him and is in a position to really do great things next year."
A message left with Favre's agent, Bus Cook, wasn't immediately returned.
Favre had a renaissance season in 2007, setting numerous league records leading the NFL's youngest team to an NFC North division title and the NFC championship game at Lambeau Field.
Everything seemed aligned for the Packers and Favre to return to the Super Bowl for the first time since 1998, but Favre threw a costly overtime interception against the Giants. New York won 23-20 and went on to beat New England in the Super Bowl.
Murphy, who played eight years in the NFL with the Redskins from 1977-84, said that Favre continues his annual rite of winter in Wisconsin because it's hard to prepare for the rigors of another season.
"When we watch the games on Sunday, you see the joy and how much fun he has with the game and obviously he's still playing at a high level," Murphy said. "What you don't see is all the work that he has to do all through the offseason. The training and the grind of it."
Murphy, who formally replaced Bob Harlan as the Packers' top executive on Jan. 28, said he anticipates a decision in the coming days.
"I think he still enjoys it, particularly the games, and he has a passion for it, but it's not as easy of a decision as some people might think," Murphy said.
Most of Murphy's major franchise decisions were made before he formally took over, with Harlan signing general manager Ted Thompson and coach Mike McCarthy to five-year deals in the wake of the successful season.
"Bob was really smart, and I supported it, locking both of them up with long-term contracts right as we made the transition," Murphy said. "I really feel good about the future of the Packers. I think that has really given me the luxury of time. I don't feel the organization is broken in any way."
Instead, Murphy said the early part of his tenure as team president will center on league issues, including the collective bargaining agreement and revenue sharing.
"There's a level, a sense that the agreement is costing the clubs a lot more than they would like, more than the previous agreements have cost them, but I think it's all part of negotiation," he said.
Murphy has a unique prospective with any labor disputes on the horizon.
He was the assistant executive director of the NFL Players Association for four years after his playing career ended, including during the 1987 strike.
"If you look back over the history, one of the biggest changes in the relationship between the owners and the Players Association was the '87 strike," said Murphy, who credits former NFL commissioner Paul Tagliabue and union boss Gene Upshaw for mending fences to establish a good working relationship that resonates today.
Of course, big labor issues mean much less than championships in Titletown, the league's smallest outpost.
And Murphy, a former defensive back, said the Packers have their best shot to win again with Favre, who threw for 4,155 yards last season with 28 touchdowns and 15 interceptions to earn his ninth Pro Bowl nod.
"If Brett Favre comes back, as I said before, I do think it gives us our best chance to win a Super Bowl next year, just with his experience, his knowledge of the game and his leadership ability," Murphy said. "Nothing that a defense does to him fazes him or surprises him. He really can take advantage of defenses when they leave themselves vulnerable."