Bank Ne­gara keeps pol­icy rate at 3.25% amid slower eco­nomic growth

The Sun (Malaysia) - - SPEAK UP -

PETAL­ING JAYA: Bank Ne­gara Malaysia (BNM) de­cided to main­tain the Overnight Pol­icy Rate (OPR) at 3.25% at its Mon­e­tary Pol­icy Com­mit­tee (MPC) meet­ing yes­ter­day.

The cen­tral bank said in a state­ment that at the cur­rent level of the OPR, the de­gree of mon­e­tary ac­com­moda­tive­ness is con­sis­tent with the in­tended pol­icy stance.

“The MPC will con­tinue to mon­i­tor and as­sess the bal­ance of risks sur­round­ing the out­look for do­mes­tic growth and in­fla­tion,” it added.

BNM noted that for the lo­cal econ­omy, the lat­est in­di­ca­tors point to­wards con­tin­ued ex­pan­sion in pri­vate sec­tor ac­tiv­ity, while pri­vate con­sump­tion will re­main the main driver of growth, sup­ported by con­ducive labour mar­ket con­di­tions.

“In­vest­ment ac­tiv­ity is pro­jected to be sus­tained by con­tin­ued ca­pac­ity ex­pan­sion in key sec­tors, driven by pos­i­tive de­mand and ef­forts to en­hance au­to­ma­tion. Pub­lic sec­tor spend­ing, how­ever, is likely to weigh on growth, amid con­tin­ued repri­ori­ti­sa­tion of ex­pen­di­ture by the govern­ment.”

It said re­cent an­nounce­ments by the govern­ment have pro­vided more clar­ity on fis­cal and eco­nomic de­vel­op­ment poli­cies.

BNM ex­pects ex­ports to pro­vide an ad­di­tional lift to growth, al­beit to a lesser ex­tent due to mod­er­at­ing global mo­men­tum.

“The do­mes­tic econ­omy con­tin­ues to face down­side risks stem­ming from any fur­ther es­ca­la­tion in trade ten­sions and pro­longed weak­ness in the mining and agri­cul­ture sec­tors. Nev­er­the­less, on bal­ance, the Malaysian econ­omy is ex­pected to re­main on a steady growth path in 2018 and 2019.”

In line with re­gional economies, BNM said the do­mes­tic fi­nan­cial mar­kets con­tinue to ex­pe­ri­ence non-res­i­dent port­fo­lio out­flows due to global de­vel­op­ments, but the fi­nan­cial mar­kets re­main or­derly with do­mes­tic mon­e­tary and fi­nan­cial con­di­tions sup­port­ive of eco­nomic growth.

The cen­tral bank said while the im­pact of the con­sump­tion tax pol­icy will con­trib­ute to higher head­line in­fla­tion in 2019, it will lapse to­wards the end of the year.

MIDF Re­search said the de­ci­sion to main­tain the pol­icy rate was widely ex­pected and timely as macroe­co­nomic in­di­ca­tors are re­flect­ing mod­er­at­ing signs, es­pe­cially on the global front. It opined that a change in mon­e­tary stance is not re­quired at this junc­ture as it will af­fect the tra­jec­tory of do­mes­tic growth.

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