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 growth momentum has continued to be modest. Latest economic data
suggests that the recovery is uneven while downside risks to global growth
prospects remain. Growth in the major advanced economies continues to be
constrained by ongoing fiscal consolidation, slow recovery in financial
intermediation and weak labour market conditions. In Asia, while growth has
been affected by the weak external environment, domestic demand continues to
support growth. Despite the improvements in international financial market
conditions, markets remain vulnerable to setbacks and changes in sentiments.
In the Malaysian economy, while the external sector is affected by global
developments, domestic demand has continued to provide support to growth.
Investment activity and private consumption have remained firm. Going
forward, the domestic economy is expected to sustain a steady growth.
Private consumption is supported by sustained income growth amid stable
labour market conditions, while investment activity is being led by capital
spending in the domestic-oriented sectors, and progress in the
implementation of infrastructure projects.
Inflation remained low at 1.5% in the first quarter. While inflation is
expected to continue to rise during the year, it is projected to remain
modest. Domestic supply and cost factors are expected to contribute to
higher prices. Externally, the risk of weather-related supply disruptions
remains and could raise global food prices. Nevertheless, given the modest
global growth prospects, pressures from global commodity prices are likely
to be contained.
The MPC considers the current stance of monetary policy to be appropriate
given the outlook for inflation and growth. In addition to domestic
conditions, the MPC will continue to carefully assess the global economic
and financial developments and their implications on the overall outlook for
inflation and growth of the Malaysian economy.
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