At the Monetary Policy Committee
(MPC) meeting today, Bank Negara Malaysia decided to maintain the Overnight
Policy Rate (OPR) at 3.00 percent.
The global economic expansion remains moderate. While there have been
improvements in the advanced economies, the recovery has been modest and
uneven. In Asia, growth is supported by improvements in the external sector
amid moderating domestic demand in some economies. Conditions in the
international financial markets continue to be volatile as markets adjust to
policy shifts in a number of major economies and to geopolitical
developments.
For the Malaysian economy, latest indicators point to further improvement in
exports and continued expansion in private sector investment spending. Going
forward, this trend is expected to continue. Exports will continue to
benefit from the recovery in the advanced economies and from regional
demand. Investment activity is projected to remain robust, led by capital
spending by the private sector, particularly in the manufacturing and
services sectors. Domestic demand is, however, expected to moderate,
reflecting the ongoing public sector consolidation and as private
consumption growth trends towards its long term average.
Inflation has been gradually rising due to disruptions in supply following
adverse weather conditions and increases in domestic costs. Going forward,
inflation is expected to be affected by higher domestic costs. The subdued
external price pressures and moderate domestic demand conditions will, to
some extent, contain the impact of these cost factors on the underlying
inflation.
The MPC will continue to evaluate the global and domestic economic and
financial developments and their implications on the overall outlook for
inflation and growth of the Malaysian economy. At the same time, the MPC
will also continue to monitor for signs of destabilising risks of financial
imbalances. The MPC remains focused on ensuring that the monetary policy
stance is consistent with price stability and continues to foster
sustainable economic growth.
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