KUALA LUMPUR: At the conclusion of its monetary policy committee (MPC) meeting, Bank Negara increased the overnight policy rate by 25 basis points (bps) to 2.5%, in line with market expectations.
In a statement, it said it raised the ceiling and floor rate of the corridor of the OPR to 2.75% and 2.25% respectively.
This is the central bank's third consecutive rate hike, bringing the total increase in the OPR to 75bps so far this year.
"At the current OPR level, the stance of monetary policy continues to remain accommodative and supportive of economic growth.
"The MPC is not on any pre-set course and will continue to assess evolving conditions and their implications on the overall outlook to domestic inflation and growth," said Bank Negara..
ALSO READ: Malaysian economy will see brighter days ahead, says Finance Minister
According to the central bank, the transition to endemicity and policy measures have contributed to the stronger growth performance in the second quarter of 2022.
It said indicators point to continued growth, underpinned by support from private sector spending.
"Labour market conditions and income prospects remain positive, with unemployment and underemployment declining further.
"The reopening of international borders will lift tourism-related sectors. Investment activity and prospects would be supported by the realisation of multi-year projects," it said.
ALSO READ: S&P: Labour market improving on economic activities
Bank Negara added that external demand is expected to moderate following softening global growth.
Despite the increased volatility in the global financial and foreign exchange markets, however, the developments are not expected to derail Malaysia's growth.
"Domestic liquidity remains sufficient, with continued orderly functioning of the financial and foreign exchange markets.
"Financial institutions also continue to operate with strong capital and liquidity buffers. These will ensure financial intermediation remains supportive of the economy," it said.
Downside risks to the domestic economy are expected to stem from weaker-than-expected global growth, further escalation of geopolitical conflicts and worsening supply chain disruptions.
