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 activity is showing signs of improvement, albeit at an
uneven pace. Growth in the major advanced economies remains constrained by
ongoing fiscal consolidation and weak labour market conditions. In Asia,
growth is supported by sustained domestic demand and a gradual recovery in
external demand. Stress in the international financial markets has also
receded. Notwithstanding these improvements, downside risks to the prospects
for global growth still remain.
In the domestic economy, a broad set of indicators suggests robust expansion
in the fourth quarter of 2012. Growth was driven by sustained domestic
consumption and investment activity with some improvements in the external
sector. Looking ahead, domestic demand is expected to continue to expand,
underpinned by firm private sector activity. Private consumption will be
supported by income growth and stable employment conditions while investment
will be led by capital spending in the domestic-oriented sectors, the oil
and gas industry and the on-going implementation of infrastructure projects.
The external sector is also expected to gradually improve and provide
additional support to the economy.
Domestic headline inflation averaged 1.6% in 2012. In 2013, inflation is
expected to be higher but to remain modest. Selected global food prices and
domestic factors are expected to increase costs and contribute to higher
prices. Nevertheless, given modest global growth prospects, pressures from
global commodity prices is expected to be contained.
The MPC considers the current stance of monetary policy to be supportive of
the economy while inflation remains contained. 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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