Bank Ne­gara keeps overnight pol­icy rate at 3pc

The Myanmar Times - Weekend - - International Business -

BANK Ne­gara’s Mone­tary Pol­icy Com­mit­tee (MPC) has main­tained the bench­mark overnight pol­icy rate (OPR) at 3% as the cur­rent stance of mone­tary pol­icy is ac­com­moda­tive.

The cen­tral bank’s call to re­tain the OPR was made dur­ing its meet­ing today based on sev­eral on­go­ing pos­i­tive fac­tors in the lo­cal and global fronts.

“At the cur­rent level of the OPR, the stance of mone­tary pol­icy re­mains ac­com­moda­tive. Given the strength of the global and do­mes­tic macroe­co­nomic con­di­tions, the MPC may con­sider re­view­ing the cur­rent de­gree of mone­tary ac­com­mo­da­tion. This is to en­sure the sus­tain­abil­ity of the growth prospects of the Malaysian econ­omy,” it said in a state­ment.

“For Malaysia, eco­nomic growth has be­come more en­trenched. Both the do­mes­tic and ex­ter­nal sec­tors con­tinue to reg­is­ter strong per­for­mance. Growth mo­men­tum has been lifted by stronger spillovers from the ex­ter­nal sec­tor to the do­mes­tic econ­omy as firms in­vest in pro­duc­tive ca­pac­ity, raise wages and hire more work­ers,” Bank Ne­gara said.

For 2018, do­mes­tic de­mand is ex­pected to re­main the key source of growth. Pri­vate con­sump­tion will re­main the largest driver of growth, sup­ported by con­tin­ued im­prove­ments in in­come and over­all labour mar­ket con­di­tions.

It added that In­vest­ment will be sus­tained by in­fra­struc­ture projects and higher cap­i­tal in­vest­ment in the man­u­fac­tur­ing and ser­vices sec­tors while the ex­ter­nal sec­tor would pro­vide ad­di­tional im­pe­tus to the econ­omy.

Over­all, Bank Ne­gara said the as­sess­ment was for growth to re­main strong in 2018.

Do­mes­tic in­fla­tion has been driven mostly by move­ments in global oil prices. Con­se­quently, head­line in­fla­tion in­creased to 4.3% in Septem­ber, aris­ing from higher global prices of re­fined oil caused by dis­rup­tions in the global sup­ply.

“For 2017 as a whole, head­line in­fla­tion is ex­pected to be at the up­per end of the fore­cast range. Mov­ing into 2018, head­line in­fla­tion is pro­jected to moder­ate on ex­pec­ta­tions of a smaller ef­fect from global cost fac­tors,” Bank Ne­gara said.

Nev­er­the­less, the trend of head­line in­fla­tion will be de­pen­dent on fu­ture global oil prices which re­main highly un­cer­tain. Un­der­ly­ing in­fla­tion, as mea­sured by core in­fla­tion, will be sus­tained by ro­bust do­mes­tic de­mand.

Bank Ne­gara said the do­mes­tic fi­nan­cial mar­kets have been re­silient and the ring­git had strength­ened to bet­ter re­flect the eco­nomic fun­da­men­tals. Ad­di­tion­ally, it said bank­ing sys­tem liq­uid­ity re­mained suf­fi­cient with fi­nan­cial in­sti­tu­tions con­tin­u­ing to op­er­ate with strong cap­i­tal and liq­uid­ity buf­fers.

The growth of fi­nanc­ing to the pri­vate sec­tor has been sus­tained and is sup­port­ive of eco­nomic ac­tiv­ity.

– The Star

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