Bank Negara maintains the OPR at 3pc
Published on: Friday, January 20, 2017
Kuala Lumpur: Bank Negara has kept the overnight policy rate (OPR) at 3pc at its Monetary Policy Committee (MPC) meeting held here, Thursday. This was in line with the recent views from economists that predicted the central bank would maintain its key benchmark rate at the current level after a 25-basis points cut in July last year.At the current level of the OPR, the central bank said the degree of monetary accommodativeness is consistent with the policy stance to ensure that the domestic economy continues on a steady growth path amid a stable core inflation, supported by sustained financial intermediation in the economy.
ADVERTISEMENT
While the risks of destabilising financial imbalances are contained, the MPC would monitor these risks to ensure the sustainability of the overall growth prospects. It would also continue to assess the balance of risks surrounding the outlook for domestic growth and inflation.For Malaysia, the central bank said the latest indicators point to continued expansion in the fourth quarter of 2016. "Going forward, private sector activity will remain the key driver of growth. Private consumption is expected to be sustained by continued wage and employment growth, with support from various policy measures to raise disposable income. "Investment activity, although moderating, will be supported by on-going infrastructure development projects and capital spending in the manufacturing and services sectors.
ADVERTISEMENT
"On the external front, the expected improvement in exports will provide some support to growth. Overall, the economy remains on track to expand as projected,' the bank noted. Headline inflation averaged 2.1pc in 2016 and is expected to average higher in 2017, amid the prospect of higher global oil prices.
ADVERTISEMENT
These cost factors, the bank said are not expected to cause significant spill overs to the broader price trends, given the stable domestic demand conditions. Underlying inflation, as measured by the core inflation index, is therefore expected to remain stable.The ringgit, along with other emerging market currencies, has seen a reduction in volatility since the sharp adjustments experienced towards the end of 2016. "The implementation of financial market development measures has provided stability to the domestic foreign exchange market. "Uncertainties in the global economy, the policy environment and geopolitical developments may, however, result in bouts of volatility in the regional financial and foreign exchange markets. Stay up-to-date by following Daily Express’s Telegram channel.
Daily Express Malaysia
