The Monetary Policy Committee (MPC) of Bank Negara Malaysia (BNM) has announced that it will once again maintain the overnight policy rate (OPR) at 3.00% in its May meeting for the year.

In its statement, the central bank said that the current OPR level continues to remain supportive of the economy and is consistent with the current assessment of the growth prospects and inflation of Malaysia. Specifically, it noted that latest indicators have pointed to a higher economic activity in the first quarter of 2024 (1Q24), driven by domestic expenditure and a recovery in exports.

The country’s economy is also expected to further improve moving forward due to various factors, including increased tourism, as well as continued employment and wage growth. Additionally, investment activities in Malaysia will be supported by the ongoing progress of multi-year projects in both the private and public sectors, the implementation of initiatives under multiple national master plans, and the higher realisation of approved investments.

Meanwhile, headline and core inflation averaged 1.7% and 1.8% in the first quarter of 2024, respectively. It is expected to remain moderate going forward, although BNM also acknowledged that this may change due to the implementation of domestic policies on subsidies and price controls, as well as global commodity prices and other developments. It projected that Malaysia’s headline and core inflation may average between 2% to 3.5%, and 2% to 3% for the year, respectively, once the subsidy rationalisation plan has been implemented.

“The MPC remains vigilant to ongoing developments to inform the assessment on the outlook of domestic inflation and growth. The MPC will ensure that the monetary policy stance remains conducive to sustainable economic growth amid price stability,” said the central bank, who also took the opportunity to stress that the ringgit currently does not reflect Malaysia’s economic fundamentals and growth prospects.

“External factors, namely shifting expectations of major economies’ monetary policy paths and ongoing geopolitical tensions, have led to heightened volatility in both capital flows and exchange rates across the region, including the ringgit,” BNM commented, adding that it is already working with the government and various other parties to cushion the pressure on the ringgit.

(Source: BNM)

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