Malaysia OPR remains at 3.25%

Bank Negara has kept the Overnight Policy Rate (OPR) at 3.25% in light of moderate global economic growth.

The decision at Thursday’s Monetary Policy Committee (MPC) meeting came after heavy debate over an anticipated 25-basis point rate hike, seeing that Malaysia had recorded a strong gross domestic product growth of 6.4% in its second quarter.

In a press statement, Bank Negara said while growth performance in advanced economies was uneven, a number of key economies continued to show broader signs of improvement.

“In Asia, growth is supported by the continued expansion in domestic demand and the improved external environment. In this environment, the international financial markets have remained relatively stable,” Bank Negara said.

Malaysia’s economic activity has been supported by the continued growth in domestic demand and exports.

Moving forward, domestic demand would be expected to moderate but remain the key driver of growth.

Bank Negara said while private investment activity was projected to remain robust, private consumption would possibly moderate.

“Exports will continue to benefit from the recovery in the advanced economies and from regional demand, although its growth will be slower, partly reflecting the base effect in the second half of 2013,” the central bank said, adding that the Malaysian economy is expected to remain on a steady growth path.

Inflation continued to stabilise, as the effects of the price adjustments for utilities and energy kept diminishing.

Inflation is expected to remain relatively stable for the remainder of the year, with next year’s projected to edge higher above its longterm average due to domestic cost factors. The absence of external price pressures and more moderate demand conditions are expected to mitigate the impact of these cost factors on the underlying inflation, Bank Negara said.

The central bank also said the current stance of monetary policy remained supportive of growth. Moving forward, the MPC will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation.

The MPC would also continue to assess risks of destabilising financial imbalances.

The central bank said further adjustments to the degree of monetary accommodation may be taken, depending on the effect of new information on the assessment of the balance of risks.

“This is to ensure the sustainability of the growth prospects of the Malaysian economy,” it said.

Posted on 2014-09-19 10:43:59