Malaysia uses holistic approach for monetary policy

  • Business
  • Wednesday, 19 Nov 2014

KUALA LUMPUR: Bank Negara uses a holistic approach to formulate Malaysia’s monetary policy by looking at various factors based on current and future economic conditions, said Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz.

Responding to a question on whether Japan’s recession would have an impact on the normalisation process of Malaysia’s interest rates, Zeti said: “Monetary policy is a forward-looking policy, so, we will look at not only current conditions but also future conditions.

“Therefore, we have to make further assessments of the temporary factors which led to the slowdown in Japan’s growth, or any other major country, and then, we have to also look at their policy flexibility – whether they have the capability in adjusting policy measures,” she told reporters after delivering a keynote address at the inaugural International Statistical Institute Regional Statistics Conference here yesterday.

Japan, a major trading partner of Malaysia, saw its economy unexpectedly slip into recession in the third quarter, with its gross domestic product shrinking by an annualised 1.6% after plunging 7.3% in the preceding quarter. This was due to the increase in the country’s national sales tax, which dampened consumer spending.

Bank Negara, at its monetary policy committee meeting early this month, had maintained the overnight policy rate (OPR) at 3.25%.

There were expectations that the central bank would raise the OPR next year amid rising inflation, but somewhat healthy growth prospects.

In her keynote address, Zeti said that while the recent global financial crisis had necessitated a substantial policy focus to address short-term challenges, policymakers would also need to keep sight of the economy’s long-term vision.

“Continuous structural reforms are needed to strengthen fundamentals and improve economic resilience,” Zeti said.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

Business , Bank Negara , Zeti , interest rate


Next In Business News

Unisem’s Ipoh plant impacted by EMCO closure
SCIB JV accepts RM138.5mil contract for Terengganu roadworks
T7 Global to provide ROV underwater services for 10 platforms
AIA Malaysia taking up minority stake in TNG Digital
FBM KLCI falls on new Covid record
SME Corp, MIDF launch SME revitalisation financing plan
Chinese tutoring firms extend plunge as Beijing cracks down
MyCC monitoring food delivery platform firms
Ringgit opens marginally as Covid cases surge
Foreign funds' net selling slows

Stories You'll Enjoy