The Monetary Policy Committee (MPC) of Bank Negara Malaysia (BNM) has decided to maintain the overnight policy rate (OPR) at 1.75%.
“For Malaysia, latest indicators point to improvements in external demand and continued consumer spending,” the central bank said in a statement today. “While the re-imposition of containment measures will affect growth in the first quarter, the impact is expected to be less severe than that experienced in the second quarter of 2020.”
Going forward, growth is projected to improve from the second quarter onwards, driven by various factors such as the recovery in global demand and higher production from manufacturing facilities. “The growth outlook, however, remains subject to downside risks, stemming mainly from ongoing uncertainties in developments related to the pandemic, and potential challenges that might affect the roll-out of vaccines both globally and domestically,” BNM said.
As for headline inflation in 2021, it is projected to average higher – primarily due to higher global oil prices. Underlying inflation is expected to remain subdued amid continued spare capacity in the economy.
Earlier in 2020, the OPR was slashed a total of four times – by 25 basis points in January and March respectively, and by a bigger 50 basis point slash in May. The OPR was then reduced to its record-setting low of 1.75% in July 2020. Since then, the MPC has decided to maintain this rate through its September and November meetings as well as into the new year.