Bank Negara keeps OPR unchanged at 3.25%

KUALA LUMPUR: Bank Negara Malaysia’s (BNM) monetary policy committee kept the Overnight Policy Rate (OPR) unchanged at 3.25% as the policy remains accommodative and supportive of economic activity.

It said on Thursday that latest indicators suggested domestic demand has continued to support growth in the first quarter. 

“Looking ahead, the prospects are for the Malaysian economy to remain on a steady growth path, with domestic demand remaining as the key driver of growth,” it said. 

BNM said it expected private consumption to moderate as households adjust to the Goods and Services Tax (GST), which came into effect on April 1.

However, it expected consumption expenditure to be supported by the steady rise in incomes and employment. 

BNM forecast investment activity to be led by capital spending in the export-oriented industries, the services sector and for infrastructure projects. 

“These investments will cushion the impact of the lower oil and gas-related investment activity,” it said. 

On the external front, while export growth will be affected by lower commodity prices, manufactured exports will continue to benefit from the improvement in economic activity in several advanced economies and the sustained growth in Asia.

On Thursday, the International Trade and Industry Ministry (MITI) announced Malaysia’s March exports rebounded with a 2.3% growth to RM66.47bil from a year ago. The growth in exports exceeded economists forecast of a 4.2% decline.

Leading the exports growth were manufactured goods valued at RM52.67bil or 79.2% of total exports in March. This was an increase of 5.7% or RM2.83bil from March 2014.

As for inflation, BNM said headline inflation averaged at 0.7% in the first quarter of 2015 due to lower domestic fuel prices. 

“For the rest of the year, headline inflation is expected to trend higher given the impact of the implementation of the GST. 

“This is expected to be partially offset by the overall lower global commodity and energy prices. Underlying inflation is expected to remain contained amid the stable domestic demand conditions,” it said.