BNM to ensure monetary policy conducive to long-term growth, stability

Bank Negara Malaysia (BNM) will ensure that the nation’s monetary policy stance remains conducive to sustainable domestic economic growth in the long term amid price stability.

“Our prospects are good. We have reason to cautiously anticipate a better year ahead. There is also a favourable window of opportunity to implement crucial structural reforms. By taking decisive and collective actions, we can capitalise on Malaysia’s robust and resilient economic rebound post-Covid and lay the path for sustained growth and prosperity.

“While there may be challenges during this transition, these reforms are investments in our future towards prosperity of the nation,” said governor Datuk Abdul Rasheed Ghaffour during a press conference when announcing BNM’s 2023 financial report.

He added that the favourable economic conditions in 2024 provide a window for the implementation of structural reforms, such as subsidy rationalisation, is necessary to strengthen the economy post-crisis, ultimately benefitting Malaysia in the long run.

“However, we will remain vigilant and continue to look at the data, whether there is an anchoring of inflation or demand pressures. Only such situations will require monetary policy interventions,” he said.

“Foreign exchange and monetary operations will also continue to ensure sufficient liquidity in the foreign exchange, money as well as government bond markets,” said Abdul Rasheed, adding that BNM expects that they will complement the nation’s other policies to ensure the smooth functioning of domestic financial markets and financial intermediation.

“BNM is committed to collaborating closely with our stakeholders on relevant policy measures, especially structural reforms. These efforts would not only address immediate economic challenges, but also enhance Malaysia’s economic resilience in the years ahead,” he added.

Meanwhile, he said BNM holds the stance the ringgit is undervalued and is projected to improve in the year.

“Looking ahead, financial markets expect the ringgit to appreciate further into 2024 and continue on an appreciating trend as the effects of global factors subside. Some analysts have projected further into 2025 and assess the ringgit to continue strengthening.”

He pointed out that Malaysia’s economic fundamentals are strong, which include a diversified export market and the financial sector is expected to provide financing to economic growth and a stable inflation environment.

“The prospects of the economy moving forward are very positive. We project growth to be between 4% and 5% this year. So all these tell us that where the ringgit is now today is not reflective of the fundamentals and the prospects of the economy,” he added. -