Kuala Lumpur: Bank Negara Malaysia (BNM) has decided to maintain the Overnight Policy Rate (OPR) at three per cent.At the current level of the OPR, the degree of monetary accommodativeness is consistent with the policy stance to ensure that the domestic economy continues on a steady growth path amid stable inflation, supported by continued healthy financial intermediation in the economy, it said in a statement.The decision was made at the central bank's Monetary Policy Committee (MPC) meeting here Wednesday.
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BNM last adjusted the OPR on July 13 this year when it reduced the rate by 25 basis points to 3.00 per cent.The central bank said the domestic financial conditions have remained stable since the previous MPC meeting with financial markets continuing to function in an orderly manner.
"Financial institutions continue to operate with strong capital and liquidity buffers and the growth of financing to the private sector is consistent with the pace of economic activity."The banking system liquidity remains ample," it said.
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Overall, BNM projected the economy to expand within expectations in 2016 and to remain on a steady growth path in 2017."Headline inflation moderated to 1.1 per cent in July. Inflation is expected to be at the lower end of the two to three per cent range for 2016 and to remain relatively stable in 2017 given the environment of low global energy and commodity prices, and generally subdued global inflation," it said.
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The central bank said the country's growth moderated slightly in the second quarter of this year following weaker net exports and a drawdown in stocks. "Domestic demand, however, remained the key driver of growth with private consumption and private investment growing at a faster pace."Going forward, private consumption will remain supported by wage and employment growth, with additional impetus coming from announced government measures to increase disposable income," it said.The central bank said investment activity would continue to be anchored by the ongoing implementation of infrastructure projects and capital spending in the manufacturing and services sectors. On the external front, it said export growth was expected to remain weak following subdued demand from Malaysia's key trading partners. In Asia, economic activity has been supported by domestic demand amid weaker export growth."While volatility in the international financial markets has subsided, markets remain vulnerable to setbacks and changes in sentiments.
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"Going forward, downside risks to global growth remain high following uncertainty over the growth momentum and policy shifts in major economies and unresolved issues post the European Union referendum in the United Kingdom," it said. "The MPC will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation," it added. – Bernama
