The Monetary Policy Committee of Bank Negara Malaysia (BNM) has once again decided to maintain its overnight policy rate (OPR) at 1.75%.
In its statement, BNM said that the latest indicators point towards significant improvement in the nation’s economic activity in the third quarter. Although the introduction of targeted measures to contain Covid-19 in several states could affect the momentum of recovery in the fourth quarter, growth for the year 2020 is expected to be within the earlier forecasted range.
As for headline inflation, it is likely to average negative this year given the substantially lower global oil prices. For 2021, both headline inflation and economic activity is projected to average higher.
Earlier in September, BNM also maintained the OPR at 1.75%, after having already slashed the OPR by a total of four times in 2020. From 3.0% at the start of the year, the OPR was reduced by 25 basis points in January and then by another 25 basis points in March. In May, the OPR was slashed by 50 basis points to its lowest level in ten years at 2.0%, before being further reduced to the current record low of 1.75% in July.
“The MPC considers the stance of monetary policy to be appropriate and accommodative. The cumulative 125 basis points reduction in the OPR this year will continue to provide stimulus to the economy,” said the central bank. “The MPC will continue to assess evolving conditions and their implications on the overall outlook for inflation and domestic growth. The Bank remains committed to utilise its policy levers as appropriate to create enabling conditions for a sustainable economic recovery.”
(Source: Bank Negara Malaysia)