BNM maintains OPR at 3.25pc
Published on: Friday, May 20, 2016
Kuala Lumpur: Bank Negara Malaysia has decided to maintain the Overnight Policy Rate (OPR) at 3.25 per cent as it remained accommodative and supportive of economic activity. The central bank last raised the OPR by 25 basis points on July 10, 2014. "Overall domestic financial conditions have remained stable," it said in a statement. The financial system continued to be sound, with improved liquidity in the domestic financial system, continued orderly functioning of the financial and foreign exchange markets and financial institutions operating with strong capital and liquidity buffers, it said after the third Monetary Policy Committee (MPC) meeting for the year and the first chaired by newly-appointed Governor Datuk Muhammad Ibrahim.
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The growth of financing to the private sector is consistent with the pace of economic activity and financing conditions remained supportive of economic growth. However, the MPC recognised that there were downside risks in the global economic and financial environment and was closely monitoring and assessing their implications on domestic price stability and growth. "This is to ensure that the monetary policy stance is consistent with the sustainable growth of the Malaysian economy," it added. The central bank said the Malaysian economy, which expanded 4.2 per cent in the first quarter, was expected to improve with domestic demand remaining the key driver of growth.
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The statement also said that private consumption was expected to expand further supported by continued growth in wages and employment and, the additional disposable income from measures announced during the 2016 Budget Recalibration. "While the growth of private investment has moderated due to lower investment by the oil and gas industry and commodities sector, overall investment activity will remain supported by the implementation of infrastructure projects and capital spending in the manufacturing and services sectors," the statement added.
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The external sector will continue to be constrained by weak external environment. "The prospects are therefore for the economy to expand by 4-4.5 per cent in 2016," said the central bank. Stay up-to-date by following Daily Express’s Telegram channel.
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