KUALA LUMPUR, Nov 5 -- The Monetary Policy Committee (MPC) of Bank Negara Malaysia has decided to maintain the Overnight Policy Rate (OPR) at 3.0 per cent.
The central bank said the global economy is expanding at a more moderate pace, with the slowdown becoming more synchronised across both the advanced and emerging economies.
“There is also evidence of the weak global trade affecting domestic demand, particularly investment activity. Going forward, geopolitical tensions, policy uncertainty and the unresolved trade disputes could exacerbate financial market volatility and further weigh on the global growth outlook.
“Monetary easing and other policy measures are expected to provide some support to growth,” it said in a statement here today.
For the Malaysian economy, BNM said latest indicators are in line with expectations, suggesting a moderate expansion of economic activity for the third quarter.
Today's MPC meeting would be the last for the year and the next meeting has been scheduled on Jan 21 and 22, 2020.
During the third meeting on May 7 this year, the committee reduced the OPR by 25 basis points to 3.0 per cent, with the ceiling and floor rates of the corridor for the OPR are correspondingly reduced to 3.25 per cent and 2.75 per cent respectively.
At the current level of the OPR, the central bank said the monetary policy stance remained accommodative and supportive of economic activity.
“The MPC 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,” it said.
Going forward, the growth is expected to remain anchored by firm private sector expenditure, said the central bank.
“While private investment is projected to remain modest, household spending will be supported by continued employment and wage growth. The recent government measures will provide additional impetus to economic activity.
“On the external front, while exports will continue to be affected by slower global demand, this will be partly mitigated by its diversified structure,” it said.
Overall, it said the growth of the Malaysian economy is expected to be within projections in 2019 and the pace sustained going into 2020.
However, BNM said this projection remains subject to downside risks, mainly stemming from uncertainties in global economic and financial conditions as well as weakness in commodity-related sectors.
“Average headline inflation in 2019 will be low. In 2020, the headline inflation is expected to average higher but remain modest. This reflects mainly the lapse in the impact from consumption tax policy changes, the lifting of the domestic retail fuel price ceiling amid the relatively subdued outlook on global oil prices, and measures in place to contain food prices,” it said.
Bank Negara said the trajectory of headline inflation will, however, be dependent on global oil and commodity price developments while underlying inflation is expected to remain stable, supported by the continued expansion in economic activity and in the absence of strong demand pressures.
“The meeting also approved the schedule of MPC meetings for 2020. In accordance with the Central Bank of Malaysia Act 2009, the MPC will convene six times during the year. The meetings will be held over two days, with the Monetary Policy Statement released at 3 pm on the second day of the meeting,” it added.