The continued recovery in the global economy, supported by improvements in manufacturing and services activities, although the strength of recovery remains varied across countries, mainly in line with their vaccination coverage, relaxation of containment measures and degree of policy support.
KUCHING: The Monetary Policy Committee (MPC) of Bank Negara Malaysia (BNM) has decided to maintain the overnight policy rate (OPR) at 1.75 per cent, marking the seventh consecutive meeting in which the key policy rate is maintained.
The rate was last adjusted following the July 7, 2020 MPC meeting, which saw a 0.25 basis point cut from two per cent as at May 5, 2020.
In a statement, the central bank noted the continued recovery in the global economy, supported by improvements in manufacturing and services activities, although the strength of recovery remains varied across countries, mainly in line with their vaccination coverage, relaxation of containment measures and degree of policy support.
“Economies with better progress in their vaccination programmes have eased containment measures, enabling a continued recovery in domestic activity. Sizeable fiscal and monetary stimulus in several major economies continue to support the recovery momentum. Financial conditions also remain supportive of growth.
“Overall, the balance of risks to the global growth outlook is tilted to the downside. This is attributed mainly to uncertainty over the path of the pandemic amid the emergence of variants of concern, and potential risk of heightened financial market volatility amid adjustments in monetary policy in major economies,” BNM in its statement.
For Malaysia, the reimposition of nationwide containment measures to curb the resurgence in Covid-19 cases had dampened the growth momentum, although the bank said the recent gradual relaxation for economic sectors to operate and the higher adaptability of firms to the new operating environment and continued policy support would partly mitigate the impact.
It said the further easing of containment measures, rapid progress of the domestic vaccination programme and continued expansion in global demand will support the growth momentum going into 2022.
Risks, however, remain tilted to the downside due to external and domestic factors, including delays in the easing or the reimposition of broad-based containment measures due to the impact of new Covid-19 variants of concern and a weaker-than-expected global growth recovery.