2nd November 2023 - 3 min read
The Monetary Policy Committee (MPC) of Bank Negara Malaysia (BNM) has announced that it will continue to hold the country’s overnight policy rate (OPR) at 3.00% in its final meeting for 2023. This is the third consecutive time that the MPC has decided to maintain the OPR at its current rate after raising it once this year in May 2023.
In a statement, BNM explained that at the current OPR level, the monetary policy stance remains supportive of Malaysia’s economy and is consistent with the current assessment of the inflation and growth prospects. Specifically, Malaysia is expected to record an improvement in its economic activities in the third quarter, and subsequent growth in 2024 will continue to be driven mainly by domestic expenditure. This will likely be supported by continued employment and wage growth, an expected recovery in electrical and electronics (E&E) exports, as well as increased tourist arrivals and spending.
In addition to that, BNM also expects investment activities to be sustained by the continued progress of multi-year infrastructure projects and the implementation of initiatives under various national masterplans. Initiatives announced under Budget 2024 are also likely to help spur economic growth.
Meanwhile, on inflation in the third quarter, BNM said that both headline and core inflation have moderated to 2% and 2.5%, respectively – due mainly to easing cost pressures.
“Going into 2024, inflation is expected to remain modest. Risks to the inflation outlook remain highly subject to changes to domestic policy on subsidies and price controls, as well as global commodity prices and financial market developments. Of note, the government’s intention to review price controls and subsidies in 2024 will affect the outlook for inflation and demand conditions,” said the central bank.
Additionally, BNM acknowledged that the persistently strong US dollar has affected various major and emerging market currencies, including the ringgit, but stressed that this is not expected to derail Malaysia’s growth prospects going forward. It also said that it will continue to manage the various risks posed, and provide sufficient liquidity to ensure the orderly functioning of domestic foreign exchange market.
“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,” BNM further said in its statement.
Malaysia began 2023 with its OPR at 2.75%, following a series of hikes in 2021 that brought the rate back up from a historical low of 1.75% in 2020. Adopting a measured and gradual stance in its monetary decisions, BNM had then elected to maintain the OPR at its existing rate in most of its MPC meetings throughout this year, with the exception of the May meeting, where it decided to raise the OPR from 2.75% to the current 3.00%.
(Source: Bank Negara Malaysia)
Subscribe to our exclusive weekly newsletter and we’ll bring you the week’s highlights of financial news, expert tips, guides, and the latest credit card and e-wallet deals.
Stay tuned for what’s to come next in the personal finance world
Comments (0)