KUALA LUMPUR: Bank Negara maintained the Overnight Policy Rate (OPR) at an all-time low of 1.75% at the Monetary Policy Committee (MPC) meeting on Wednesday, which was in line with economists' expectations.
"The MPC considers the stance of monetary policy to be appropriate and accommodative," it said in a Wednesday statement.
The central bank said economic activity in Malaysia weakened in the third quarter amid the imposition of nationwide containment measures to curb the resurgence in Covid-19 cases.
However, in line with the relaxation of restrictions, the latest frequency indicators show that economic activity has recovered from the trough in July.
"Going into 2022, the growth momentum is expected to improve, supported by expansion in global demand, higher private sector expenditure in line with the resumption of economic activity and continued policy support," it said.
The OPR has been retained at 1.75% since July 7, 2020, when Bank Negara cut the benchmark lending rate following a sharp economic contraction in the second quarter of the year due to the impact of the Covid-19 pandemic.
In the lead up to today's MPC meeting, analysts had predicted that the central bank would keep the OPR unchanged until at least the second quarter of 2022 to support a steady growth path for the economy.
UOB Global Economics and Markets Research projected the OPR would remain unchanged until mid-2022, and thereafter there will be a 25 basis points increase to 2.00% in the second half of 2022.
Kenanga Research said Bank Negara is likely to keep the OPR unchanged at 1.75% in the next six to nine months.
On inflation, the central bank said headline inflation was likely to average within the projected range of 2% and 3% in 2021, having averaged 2.3% to-date.
Underlying inflation as measured by core inflation is expected to average below 1% for the year.
"Moving into 2022, headline inflation is projected to remain moderate.
"As economic activity normalises, core inflation is expected to edge upwards but remain benign given the continued spare capacity in the economy and slack in the labour market.
"The outlook, however, continues to be subject to global commodity price developments and some risk from prolonged supply-related disruptions," said Bank Negara.
"The MPC considers the stance of monetary policy to be appropriate and accommodative," it said in a Wednesday statement.
The central bank said economic activity in Malaysia weakened in the third quarter amid the imposition of nationwide containment measures to curb the resurgence in Covid-19 cases.
However, in line with the relaxation of restrictions, the latest frequency indicators show that economic activity has recovered from the trough in July.
"Going into 2022, the growth momentum is expected to improve, supported by expansion in global demand, higher private sector expenditure in line with the resumption of economic activity and continued policy support," it said.
The OPR has been retained at 1.75% since July 7, 2020, when Bank Negara cut the benchmark lending rate following a sharp economic contraction in the second quarter of the year due to the impact of the Covid-19 pandemic.
In the lead up to today's MPC meeting, analysts had predicted that the central bank would keep the OPR unchanged until at least the second quarter of 2022 to support a steady growth path for the economy.
UOB Global Economics and Markets Research projected the OPR would remain unchanged until mid-2022, and thereafter there will be a 25 basis points increase to 2.00% in the second half of 2022.
Kenanga Research said Bank Negara is likely to keep the OPR unchanged at 1.75% in the next six to nine months.
On inflation, the central bank said headline inflation was likely to average within the projected range of 2% and 3% in 2021, having averaged 2.3% to-date.
Underlying inflation as measured by core inflation is expected to average below 1% for the year.
"Moving into 2022, headline inflation is projected to remain moderate.
"As economic activity normalises, core inflation is expected to edge upwards but remain benign given the continued spare capacity in the economy and slack in the labour market.
"The outlook, however, continues to be subject to global commodity price developments and some risk from prolonged supply-related disruptions," said Bank Negara.
Already a subscriber? Log in
Get 20% OFF The Star Digital Access
Cancel anytime. Ad-free. Unlimited access with perks.
