BNM keeps OPR unchanged at 3%

KUALA LUMPUR (Sept 12): Bank Negara Malaysia's (BNM) monetary policy committee (MPC), at its meeting today, decided to maintain the overnight policy rate (OPR) at 3%.

BNM said the stance of Malaysia's monetary policy, at the current level of the OPR, remains accommodative and supportive of economic activity and that the committee will continue to assess the balance of risks to domestic growth and inflation, to ensure that the monetary policy stance remains conducive to sustainable growth amid price stability.

"For Malaysia, the stronger economic growth performance in the second quarter of 2019 was underpinned by the resilience of private spending amid broad-based expansion in key economic sectors," the central bank said in a statement.

"Going forward, these domestic drivers of growth, alongside stable labour market and wage growth, are expected to remain supportive of economic activity," it added.

On the external front, BNM said Malaysia's diversified exports will partly mitigate the impact of softening global demand.

"Overall, the baseline growth projection for 2019 remains unchanged, within the range of 4.3%-4.8%.

"This projection, however, is subject to further downside risks from worsening trade tensions, uncertainties in the global and domestic environment, and extended weakness in commodity-related sectors," it said.

Year-to-date headline inflation averaged at 0.3% and is projected to average higher for the remaining months of the year and into 2020, said BNM.

"However, headline inflation is expected to remain low. This reflects the lapse in the impact of consumption tax policy changes, the relatively subdued outlook on global oil prices, and policy measures in place to contain food prices. The trajectory of headline inflation will, however, be dependent on global oil and commodity price developments.

"Underlying inflation is expected to remain stable, supported by the continued expansion in economic activity and in the absence of strong demand pressures," it added.