KUALA LUMPUR: Bank Negara Malaysia’s Monetary Policy Committee kept the overnight policy rate (OPR) unchanged at 3.25% during its meeting on Wednesday, which was in line with expectations.
It said at the current level of the OPR, the degree of monetary accommodativeness is consistent with the intended policy stance.
“The MPC will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation,” it said.
On the economic outlook, it said the economy was expected to remain on a “steady growth path” after continuing to expand in the first half of the year.
Underpinning the growth was private sector activity with additional impetus from net exports.
“The positive growth performance is expected to be sustained, driven by both domestic and external demand.
“Private consumption will be underpinned by continued wage and employment growth, with an additional lift from higher household spending due to the tax holiday,” it said.
The growth outlook would be further supported with greater certainty in domestic policy in the coming months, it added.
As for the headline inflation for 2018, the MPC projected it to be lower than earlier forecast.
This was after taking into consideration the impact of recent policy measures on domestic cost factors. However, the impact of these measures on inflation was transitory.
The MPC expected headline inflation to likely turn negative in some months and remain low in the first half of 2019 before trending upwards as these transitory effects lapse.
Core inflation, it said, was expected to remain relatively stable in line with sustained domestic demand.
The MPC said the positive domestic economic outlook, sound financial sector and improving current account surplus of the balance of payments would continue to support Malaysia’s fundamentals.
Domestic financial markets have remained resilient despite non-resident portfolio outflows.
As for the ringgit exchange rate, the MPC said it would be more reflective of the underlying fundamentals of the economy when the external and domestic uncertainties recede.
"Notwithstanding the heightened financial market volatility, the domestic monetary and financial conditions remain supportive of economic growth.
Bank Negara’s monetary operations continue to ensure sufficient liquidity to support the orderly functioning of money and foreign exchange markets and intermediation activity," it said.