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BNM maintains Monetary Policy Committee at 3.25pc
Published on: Thursday, March 08, 2018

Kuala Lumpur: Bank Negara Malaysia (BNM) has maintained the Overnight Policy Rate (OPR) at 3.25 per cent following the Monetary Policy Committee (MPC) meeting on Wednesday.

The central bank in a statement said at the OPR's current level, the degree of monetary accommodativeness was consistent with the policy stance, to ensure that the domestic economy continued on a steady growth path amid lower inflation.

"The MPC will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation," it added.

It said domestic financial markets had been resilient with the broad appreciation of the ringgit in the past year and better reflected the economic fundamentals.

"Liquidity in the banking system remains sufficient with financial institutions continuing to operate with strong capital and liquidity buffers," it added.

According to BNM, the growth of financing to the private sector has been sustained and is supportive of economic activity.

Externally, it said, the global economy continued to strengthen with global trade showing strong growth momentum.

"In the advanced economies, rising wages and policy support will provide further impetus to growth.

In Asia, growth would be driven by sustained domestic activity and strong external demand.

"Recent adjustments in the financial markets, though short-lived, indicate that volatility may re-emerge.

Trade tensions have also risen of late, and at this point, risks to the global growth outlook remain balanced, pointing towards continuity in global economic expansion,' it added.

BNM said for Malaysia, the strong growth performance in the fourth quarter of last year, continued to be anchored by private sector spending.

Going forward, it said growth prospects would be sustained by the positive global growth outlook and spillovers from the external sector to the domestic economy.

"Domestic demand will remain the key driver of growth, underpinned by favourable income and labour market conditions, spending on new and ongoing infrastructure projects and sustained capital investment by firms in the manufacturing and services sectors.

"With additional impetus from the external sector, growth is expected to remain strong in 2018," it added.

On inflation, BNM projected it to average lower in 2018, on expectations of a smaller effect from global cost factors, as a stronger ringgit exchange rate compared to last year would mitigate import costs.

It said global energy and commodity prices are expected to trend higher this year, but at a more moderate pace relative to 2017.

However, it said the trajectory of headline inflation would be dependent on future global oil prices which remained highly uncertain.

"Underlying inflation, as measured by core inflation, is also projected to moderate due to improving labour productivity and ongoing investments for capacity expansion," BNM added. – Bernama

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