UPDATED: BNM cuts OPR to 2.50% as COVID-19 weakens global economy

KUALA LUMPUR (March 3): Bank Negara Malaysia (BNM) said today its monetary policy committee (MPC) decided to reduce the overnight policy rate (OPR) by 25 basis points to 2.50% to provide a more accommodative monetary environment to support the projected improvement in Malaysia's economic growth amid the global COVID-19 outbreak.

In a statement today, BNM said the ceiling and floor rates of the OPR corridor are correspondingly reduced to 2.75% and 2.25% respectively.

"For 2020, private and public sector activities will be supportive of growth. Household spending is expected to grow at a slower pace amid moderate employment and income growth. Investment activity is projected to record a modest recovery, underpinned by ongoing and new projects, both in the public and private sectors.

"The 2020 economic stimulus package will also provide some support to economic activity. Although domestic growth is expected to gradually improve in the second half of the year, there are key downside risks, mainly stemming from the evolving nature and prolonged impact of the COVID-19 outbreak, and continued weakness in commodity-related sectors," BNM said.

Malaysia's 2020 headline inflation is expected to average higher but remain modest, according to BNM.

BNM said the trajectory of headline inflation will be dependent on global crude oil and commodity prices and the timing of the lifting of the domestic retail fuel price ceilings.

"Underlying inflation is expected to be more moderate amid limited demand pressures despite the continued expansion in economic activity, BNM said.

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