Overnight Policy Rate kept at 3 pct

KUCHING: At its meeting yesterday, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at three per cent.

THis comes as BNM said the global economy continues to expand amid resilient labour markets in some countries and continued recovery in global trade.

“Looking ahead, global growth is expected to be sustained, as headwinds from tight monetary policy and reduced fiscal support will be cushioned by positive labour market conditions and moderating inflation,” it said in a statement.

“Global trade is expected to strengthen further as the global tech upcycle gains momentum.”

While global headline and core inflation continued to edge downwards in recent months, the bourse saw that pace for disinflation has slowed in some advanced economies.

This increases the prospect of interest rates to remain high for longer, particularly in the US. The growth outlook remains subject to downside risks, mainly from further escalation of geopolitical tensions, higher-than-anticipated inflation outturns, and volatility in global financial markets.

“For the Malaysian economy, the latest indicators point towards higher economic activity in the first quarter of 2024, driven by resilient domestic expenditure and a positive turnaround in exports,” BNM added.

“Going forward, the recovery in exports is expected to gather momentum supported by the global tech upcycle and continued strength in nonelectrical and electronics goods. Tourist arrivals and spending are also poised to rise further.

Looking ahead, global growth is expected to be sustained, as headwinds from tight monetary policy and reduced fiscal support will be cushioned by positive labour market conditions and moderating inflation.

Monetary Policy Committee

“Continued employment and wage growth remain supportive of household spending. Investment activity would be supported by the ongoing progress of multi-year projects in both the private and public sectors, the implementation of catalytic initiatives under the national master plans, as well as the higher realisation of approved investments.

“The growth outlook is subject to downside risks from weakerthan-expected external demand, and larger declines in commodity production.

“Meanwhile, upside risks to growth mainly emanate from greater spillover from the tech upcycle, more robust tourism activity, and faster implementation of existing and new projects.”

At the current OPR level, BNM affirmed that the monetary policy stance remains supportive of the economy and is consistent with the current assessment of the inflation and growth prospects.