‘RIGHT DECISION ON KEY INTEREST RATE’

Stable monetary stance that supports economic growth is good for Malaysia, say economists

MALAYSIA has made a right decision to keep its benchmark interest rate steady, said economists, who stressed that a stable monetary stance supporting economic growth is good for Malaysia amid global pressures.

Bank Negara Malaysia yesterday kept its Overnight Policy Rate (OPR) at 3.0 per cent in a monetary stance that supports the economy, as it looks to other measures to shore up the weakened ringgit amid modest inflation.

Economists expect the central bank to hold the OPR for the rest of the year.

Malaysia University of Science and Technology economist Prof Geoffrey Williams said the unchanged rate is consistent with the central bank’s mandate and current economic conditions.

He said headline inflation has slowed considerably to 1.5 per cent since last November and the economy is growing, albeit at a slower rate, but the outlook for 2024 is positive.

“The ringgit is undervalued but intervention by Bank Negara has stabilised the ringgit, which appreciated 2.0 per cent. So there are no reasons to change the OPR now.

“It is much better to have a stable monetary stance which supports growth given the uncertain global pressures. We expect no changes in the OPR for the rest of the year unless there is a serious shock.”

Bank Muamalat Malaysia Bhd chief economist and head of social finance Dr Mohd Afzanizam Abdul Rashid said the central bank’s narratives in the accompanying statement suggest that the economy is expected to grow between four to five per cent, which is higher than 2023.

“Tourist arrivals have gone up by 100 per cent to 20.1 million in 2023. However, this still fell short of the pre-Covid level of 26.1 million in 2019, which means there is an upside potential for tourist arrivals to rise further this year, especially when the ringgit is very attractive from a tourist’s point of view.

“All in all, the (Bank Negara’s) Monetary Policy Committee (MPC) members are of the view that the state

It is much better to have a stable monetary stance which supports growth...

PROF GEOFFREY WILLIAMS Malaysia University of Science and Technology economist