The Monetary Policy Committee (MPC) of Bank Negara Malaysia (BNM) has decided to continue maintaining the overnight policy rate (OPR) at 3% in its meeting today.

In justifying its decision, BNM once again said that at the current OPR level, the monetary policy stance remains supportive of the economy and is consistent with the current assessment of the country’s growth prospects and inflation. Specifically, the central bank noted that Malaysia’s economy had expanded by 3.7% in 2023, and this growth is expected to improve in 2024, driven by the recovery in exports and domestic expenditure.

Additionally, tourist arrivals and spending are poised to rise further, and investment activities will also be supported by the ongoing progress of multi-year projects in both the private and public sectors. All of these factors are expected to propel Malaysia’s growth further in 2024, although BNM also acknowledged that external forces like an escalation of geopolitical tensions and volatility in global financial markets may pose a negative risk.

The headline and core inflation, meanwhile, stood at 1.5% and 1.8%, respectively, in January 2024 – which is in line with BNM’s expectations. “Inflation in 2024 is expected to remain moderate, broadly reflecting stable demand conditions and contained cost pressures. However, this outlook continues to be highly dependent on the implementation of domestic policy on subsidies and price controls, as well as global commodity prices and financial market developments,” said central bank in its statement.

BNM also emphasised its stance that the local currency is currently undervalued, given Malaysia’s existing economic fundamentals and growth prospects. Immediate and coordinated efforts are already being taken to improve the situation, said the central bank, and it expects to see the ringgit’s performance improve in the near future. Ongoing structural reforms are also expected to provide more enduring support to the ringgit in the medium term.

Lastly, BNM said that the MPC will remain vigilant to ongoing development and continue to assess 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 noted in its statement.

(Source: BNM)

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