Subscribe:

Pages

Friday, 14 July 2017

(The Star) Bank Negara maintains OPR at 3%

KUALA LUMPUR: Bank Negara’s Monetary Policty Committee (MPC) has maintained the Overnight Policy Rate (OPR) at 3% as the current stance of monetary policy is accommodative and supportive of economic activity.

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

While the domestic financial markets have been resilient, the ringgit has also remained stable with a more balanced demand and supply of foreign currencies, following the implementation of the two financial market development measures.

“Banking system liquidity remains sufficient with financial institutions continuing to operate with strong capital and liquidity buffers,” Bank Negara said.

It pointed out that the growth of financing to the private sector has corrected, consistent with the pace of economic activity.

“At the current OPR level, the stance of monetary policy is accommodative and supportive of economic activity. The MPC will continue to assess the balance of risks surrounding the outlook for domestic growth and inflation,” it added.

The Malaysian economy performed better than expected in the first quarter of 2017. Growth was lifted by stronger domestic demand with additional impetus from exports.

Going forward, it said the more favourable global growth prospects will lead to sustained export performance and generate positive spillovers to the domestic economy.

“Private consumption will be underpinned by higher wages and employment. The improved investment outlook is being driven by new and ongoing infrastructure projects, and stronger capacity expansion in the manufacturing and services sectors.

“Overall, the economy is expected to register higher growth in 2017,” the central bank noted.

Meanwhile, headline inflation moderated to 3.9% in May, mainly due to the decline in domestic fuel prices during the month.

“Headline inflation is expected to moderate in the second half of the year, essentially reflecting the waning effect of global cost factors. Underlying inflation, as measured by core inflation, will be sustained by the more robust domestic demand but is expected to remain contained,” it said.

On the external front, the central bank said the global economy continues to strengthen with growth becoming more synchronised across countries. “Overall, the economy is expected to register higher growth in 2017,” the central bank noted.