KUALA LUMPUR: As widely expected, Bank Negara maintained the status quo on the overnight policy rate (OPR) at the conclusion of its two-day monetary policy meeting.
In a statement issued today, the central bank said it has kept the benchmark lending rate at 3%, in line with a consensus of analysts. The OPR rate has been fixed at the current level since May 3, 2023.
According to Bank Negara, the overall growth in the Malaysian economy was within expectations in 2024 with economic activity expected to be sustained in 2025.
Employment and wage growth, as well as policy measures, including the upward revision of the minimum wage and civil servant salaries, will support household spending, it said.
Meanwhile, the robust expansion in investment activity will be sustained by the progress of multi-year projects in both the private and public sectors, the continued high realisation of approved investments, as well as the ongoing implementation of catalytic initiatives under the national master plans.
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"These investments, supported by higher capital imports, will raise exports and expand the productive capacity of the economy," said the central bank.
On trade, Bank Negara said exports are expected to be supported by the global tech upcycle, continued growth in non-electrical and electronics goods and higher tourist spending.
It cautioned that the growth outlook is subject to downside risks from an economic slowdown in major trading partners amid heightened risk of trade and investment restrictions, and lower-than-expected commodity production.
On the flip side, growth could potentially be higher from greater spillover from the tech upcycle, more robust tourism activity, and faster implementation of investment projects.
On the ringgit, the central bank said the narrowing interest rate differential between Malaysia and the advanced economies is positive for the local currency.
"While financial markets could experience bouts of volatility due to global policy uncertainties, Malaysia’s favourable economic prospects and domestic structural reforms, complemented by ongoing initiatives to encourage flows, will continue to provide enduring support to the ringgit," it added.