Thursday 28 Mar 2024
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KUALA LUMPUR: Bank Negara Malaysia (BNM) has kept the overnight policy rate (OPR) at 3.25% after the Monetary Policy Committee (MPC) meeting yesterday.

In a statement, the central bank said the stance of monetary policy remains accommodative and supportive of economic activity at the current OPR level.

BNM expects the economy to continue expanding at a more moderate pace in the second quarter, driven by domestic demand, though it forecasts slower growth in private consumption, due to frontloading of consumption ahead of the implementation of the goods and services tax (GST).

“While households are expected to continue adjusting to the GST in the immediate future, overall spending will be supported by continued wage growth and stable labour market conditions,” it said.

It added that investment is projected to be driven by capital spending in the manufacturing and services sectors and infrastructure projects, offsetting the weaker performance of the external sector.

It expects headline inflation to be higher moving forward, due to the GST and the adjustments to domestic fuel prices. Inflation, however, is expected to moderate towards the latter half of 2016.

BNM also said there is still ample liquidity in the domestic financial system with continued orderly functioning of the financial and foreign exchange markets.

 

This article first appeared in The Edge Financial Daily, on July 10, 2015.

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