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Bak Negara retains OPR at 3%

KUALA LUMPUR: Bank Negara Malaysia opted to maintain the Overnight Policy Rate (OPR) at 3.00 per cent after its Monetary Policy meeting here on Thursday Sept 8.

In a statement, the central bank said global growth had moderated in recent months as growth in the advanced economies slowed by more than expected following greater policy uncertainties.

"The situation has seen a worsening of confidence and heightened financial market volatilities, amidst continued weaknesses in labour market conditions.

"Going forward, the advanced economies are expected to register a slower pace of growth than earlier anticipated and in the Asian region, sustained domestic demand is expected to continue to support economic growth amid weaker external performance," it added.

Bank Negara also said the prolonged uncertainties in the financial markets, the weakness in the labour market and prevailing fiscal conditions in the advanced economies, had heightened the downside risks and fragility of the global economy. In the domestic economy, it added, recent indicators point to slower growth in external demand following the weaker global economic environment.

"Domestic growth prospects, however, continue to remain positive, underpinned by the expansion in private consumption and private investment. Employment conditions remain favourable amid sustained business and consumer confidence while the public sector is expected to continue to support economic growth.

"Moving forward, the more challenging external environment has, however,increased the downside risks to the domestic economy," Bank Negara said.

Domestic headline inflation moderated slightly to 3.4 per cent in July due to a slower increase in the transport category while food price inflation continue to rise.

Going forward, Bank Negara said that inflation is expected to remain relatively stable, for the rest of the year.

"While cost-push inflation continues to remain, the pace of increase is expected to be more gradual. The upside risk to inflation will also be contingent on whether the strength of domestic demand will be sustained, in the event of further
deterioration in the external conditions," it added. -- Bernama

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