KUALA LUMPUR: The Overnight Policy Rate (OPR) has been maintained at three per cent by the Monetary Policy Committee (MPC) of Bank Negara Malaysia (BNM).
In a statement, BNM said at the current level of the OPR, the stance of monetary policy is accommodative and supportive of economic activity.
BNM has kept the key interest rate unchanged at three per cent since July 13, 2016.
“The domestic financial markets have been resilient. The ringgit has remained stable with a more balanced demand and supply of foreign currencies following implementation of the two financial market development measures,” BNM said.
It also said the banking system liquidity remained sufficient with financial institutions continuing to operate with strong capital and liquidity buffers.
“The growth of financing to the private sector has improved, consistent with the pace of economic activity.
“Headline inflation is expected to moderate in the second half of the year, mainly reflecting the waning effect of global cost factors.
“Underlying inflation, as measured by core inflation, will be sustained by the more robust domestic demand, but is expected to remain contained,” the central bank added.
Headline inflation moderated to 3.9 per cent in May, due mainly to the decline in domestic fuel prices during the month.
The Malaysian economy performed better than expected in the first quarter of 2017. Growth was lifted by stronger domestic demand with an additional impetus from exports.
Going forward, BNM said the more favourable global growth prospects will lead to a sustained export performance and generate positive spillovers to the domestic economy.
Private consumption will be underpinned by higher wages and employment. The improved investment outlook is being driven by new, ongoing infrastructure projects, and stronger capacity expansion in the manufacturing and services sectors. Overall, the economy is expected to register higher growth in 2017.
The global economy continues to strengthen with growth becoming more synchronised across countries. Industrial activity and global trade are exceeding earlier projections. In the advanced economies, the broad-based increase in investments, amid the steady growth in consumption, is raising growth prospects,” it added.
BNM said in Asia, growth is expected to be driven by domestic activity and stronger external demand.
“Risks to the global growth outlook arise mainly from political and policy uncertainties in the major economies, geopolitical and financial market developments and volatility of commodity prices,” it said. — Bernama