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KUALA LUMPUR: Bank Negara Malaysia’s Monetary Policy Committee (MPC) has maintained the Overnight Monetary Policy Rate (OPR) at 1.75%, which is in line with expectations.
In a statement issued Tuesday, it said the MPC considered the monetary policy stance to be appropriate and accommodative.
“The cumulative 125 basis point reduction in this year’s OPR will continue to provide stimulus to the economy.
“The MPC will continue to evaluate the evolution of conditions and their implications for the general outlook for inflation and domestic growth. The bank remains committed to using its political levers as appropriate to create the conditions for a sustainable economic recovery, ”he said.
For Malaysia, the MPC saw the latest indicators point towards a significant improvement in economic activity in the third quarter.
However, he said that the introduction of specific measures to contain Covid-19 in various states could affect the momentum of the recovery in the fourth quarter.
“However, growth for 2020 is expected to be within the previously forecast range. By 2021, economic activity is expected to improve further.
“This will be supported by the recovery in global demand, the shift in public and private sector spending amid continued support from policy measures and increased production from new and existing facilities,” he said.
However, the pace of 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.
Bank Negara said downside risks to the outlook persist, stemming primarily from continued uncertainties surrounding the pandemic globally and domestically.
Based on previous assessments, headline inflation is likely to average negative this year due to substantially lower world oil prices.
“By 2021, headline inflation is projected to be higher on average. However, the outlook will continue to be significantly affected by world oil and commodity prices.
“Core inflation is expected to remain contained in 2021 amid continued spare capacity in the economy,” he said.
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