The Monetary Policy Committee (MPC) of Bank Negara Malaysia (BNM) has decided to maintain the overnight policy rate (OPR) at 3% in its first meeting for 2024.

In a statement, BNM stressed that the current monetary policy stance remains supportive of the economy and is consistent with the current assessment of inflation and growth prospects. Specifically, it noted that the Malaysian economy has been expanding within expectation in the fourth quarter of 2023 (4Q23), and growth is expected to improve in 2024. This will be supported by various factors, including the recovery in exports and resilient domestic expenditure, continued employment and wage growth, and tourist arrivals and spending.

Additionally, the continued progress of multi-year projects in both the public and private sectors, as well as the implementation of initiatives under various national masterplans is expected to help lift Malaysia’s economy moving forward.

“The growth outlook remains subject to downside risks stemming from weaker-than-expected external demand and larger declines in commodity production. Meanwhile, upside risks to growth mainly emanate from greater spillover from the tech upcycle, stronger-than-expected tourism activity, and faster implementation of existing and new projects,” said the central bank in its statement, adding that both headline and core inflation had continued to moderate in 4Q23.

Accordingly, BNM expects inflation to continue remaining modest in 2024, although this will also be subject to changes in domestic policies on subsidies and price controls, as well as global commodity prices and financial market developments. This refers specifically to the government’s intention to review controls and subsidies in the coming year.

Aside from that, BNM also took the opportunity to stress that the recent ringgit movements are driven primarily by external forces; it does not reflect the current domestic economic performance. To note, the local currency has been seeing a fair bit of volatility over the past months, hitting a new low against the Singapore dollar (SGD) just yesterday at 3.5333.

Meanwhile, some key external pressures that may have played a part in the ringgit’s fluctuation – and may continue to have an impact moving forward – include an escalation of geopolitical tensions and heightened volatility in global financial markets.

All that said, BNM emphasised that the MPC will continue to monitor ongoing developments and assess the outlook of Malaysia’s domestic inflation and growth. “The MPC will ensure that the monetary policy stance remains conducive to sustainable economic growth amid price stability.”

(Source: BNM)

• TAGS:
• Bank Negara Malaysia
• BNM
• Monetary Policy Committee
• MPC
• OPR
• Overnight Policy Rate