Bank Negara keeps OPR unchanged at 3.25%

KUALA LUMPUR (March 7): Bank Negara Malaysia (BNM) (pictured) has maintained the overnight policy rate (OPR) at 3.25% at the Monetary Policy Committee meeting today, as it expects the domestic economy to continue to see strong growth this year with domestic demand remaining the key growth driver amid a positive global growth outlook.

In a statement, BNM said the degree of monetary accommodativeness is consistent with the policy stance to ensure that the domestic economy continues on a steady growth path amid lower inflation.

"For Malaysia, the strong growth performance in the fourth quarter of 2017 continued to be anchored by private sector spending. Looking ahead, growth prospects will be sustained by the positive global growth outlook and spillovers from the external sector to the domestic economy.

"Domestic demand will remain the key driver of growth, underpinned by favourable income and labour market conditions, spending on new and ongoing infrastructure projects and sustained capital investment by firms in the manufacturing and services sectors. With additional impetus from the external sector, growth is expected to remain strong in 2018," it said.

It said the global economy has continued to strengthen, while global trade is showing strong growth momentum. In Asia, growth will be driven by sustained domestic activity and strong external demand.

"Recent adjustments in the financial markets, though short-lived, indicate that volatility may re-emerge. Trade tensions have also risen in the recent period. At this point, risks to the global growth outlook remain balanced, pointing towards continuity in global economic expansion," it added.

Inflation this year is projected to average lower, it went on to say, on expectations of a smaller effect from global cost factors, while a stronger ringgit exchange rate compared to 2017 will mitigate import costs.

While global energy and commodity prices are expected to trend higher in 2018, it should be at a more moderate pace relative to the previous year, said BNM.

"However, the trajectory of headline inflation will be dependent on future global oil prices which remain highly uncertain. Underlying inflation, as measured by core inflation, is also projected to moderate due to improving labour productivity and ongoing investments for capacity expansion," it said.

On Jan 25, the BNM normalised the degree of monetary accommodation by raising the OPR for the first time since 2014 by 25 basis points to 3.25%. — theedgemarkets.com

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