Borrowing costs stay at 3pc
Bank Negara Malaysia yesterday maintained borrowing costs at 3.00 per cent as widely anticipated, saying the Overnight Policy Rate (OPR) will support economic activities.
It, however, warned of risks on the global horizon, despite improvements in economic activities and global trade.
“There remain risks to global growth arising from threats, such as protectionism, geopolitical developments, heightened volatility of financial markets and negative developments in the prices of key commodities, ” said its Monetary Policy Committee in a statement yesterday.
The central bank stood pat on the OPR and also the Statutory Reserve Requirement (SRR).
On the local economy, it said growth momentum would likely be sustained this year, but a more “positive contribution” from the external sector would boost the performance.
As for headline inflation, Bank Negara has projected it to be higher this year, due to the impact of increased global oil prices on domestic retail fuel prices.
The level would remain high in the first half of the year before moderating.
“The cost-driven inflation is not expected to have a significant impact on the broader price trends given the stable domestic demand conditions,” it said, adding that core inflation was likely to rise modestly.
Bank Negara said the ringgit had continued to stabilise along with other emerging-market currencies.
UOB Bank economist Julia Goh expects Bank Negara to maintain the OPR at the same level for the rest of the year as its latest statement signalled a neutral monetary stance.
“Despite mounting expectations for Fed (the United States Federal Reserve) to raise rates in the near future, we do not expect Bank Negara to follow in tandem.”
Recent inflationary pressures were mostly cost-driven and would not warrant a rate hike, she added.
Bank Negara Malaysia stands pat on the Overnight Policy Rate and the Statutory Reserve Requirement to support economic activities.