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KUALA LUMPUR (Nov 3): Bank Negara Malaysia (BNM) decided to keep the overnight policy rate (OPR) at 1.75% today as the country’s economic activity is forecast to improve further and the central bank expects that the country’s underlying inflation is maintained. subdued as the global economy faces a resurgence in Covid-19 cases.
In a statement today, BNM said that the global economy continues to recover, led by improvements in manufacturing and export activity, although the resurgence of Covid-19 cases suggests that the global economic recovery is likely to remain uneven in the short term. .
“For Malaysia, the latest indicators point to a significant improvement in economic activity in the third quarter. The introduction of specific measures to contain Covid-19 in various states could affect the momentum of the recovery in the fourth quarter. Nonetheless, growth for the year 2020 is expected to be within the previously forecast range.
“By 2021, economic activity is projected to continue to improve. This will be supported by the recovery in global demand, the shift in public and private sector spending amid continued support for policy measures and increased production from facilities. The recovery will be uneven across sectors, with economic activity in some industries remaining below pre-pandemic levels and a slower improvement in the labor market. Downside risks to the outlook persist due to mainly to the uncertainties surrounding the pandemic at the global and national level, “BNM said in the statement, which was issued after the conclusion of the final meeting of its Monetary Policy Committee (MPC) for 2020.
On Malaysia’s inflation, BNM said that in line with previous assessments, headline inflation is likely to average negative this year due to substantially lower global crude oil prices. By 2021, headline inflation is projected to average higher.
The country’s inflation outlook will continue to be significantly affected by world oil and commodity prices, according to BNM.
“Core inflation is expected to remain subdued in 2021 amid continued available capacity in the economy,” BNM said.
According to BNM, the MPC considers the current position of the central bank’s monetary policy to be appropriate and accommodative.
“The cumulative 125 basis point reduction in this year’s OPR will continue to provide a stimulus to the economy. The MPC will continue to assess changing conditions and their implications for the overall outlook for inflation and domestic growth.
“The bank (BNM) remains committed to using its policy levers as appropriate to create the conditions for a sustainable economic recovery,” BNM said.
The MPC had also approved during its meeting today the calendar of its meetings for 2021.
BNM said that according to the Malaysian Central Bank Act 2009, the MPC will meet six times during 2021.
“The meetings will be held over two days, and the monetary policy statement will be released at 3:00 pm on the second day of the MPC meeting,” the central bank said.
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