Bor­row­ing costs stay at 3pc

New Straits Times - - Business - Rupa Damodaran

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.

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