Bank Negara Malaysia (BNM) yesterday announced that the Overnight Policy Pate (OPR) has been maintained at 3% following its Monetary Policy Committee (MPC) meeting.No change also was made to the statutory reserve requirement ratio for banks, which currently stands at 3.5%.

The central bank said in a statement that at the current level of the OPR, the degree of monetary accommodativeness is consistent with the policy stance to ensure that the domestic economy continues on a steady growth path amid stable inflation, supported by continued healthy financial intermediation in the economy.

“The MPC will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation,” it noted.

BNM said growth in the Malaysian economy moderated slightly in the second quarter of the year, following weaker net exports and a drawdown in stocks. Domestic demand, however, remained the key driver of growth, with private consumption and private investment growing at a faster pace.

“Going forward, private consumption will remain supported by wage and employment growth, with additional impetus coming from announced government measures to increase disposable income,” it noted.

BNM opined that investment activity will continue to be anchored by the ongoing implementation of infrastructure projects and capital spending in the manufacturing and services sectors.

On the external front, the central bank said, export growth is expected to remain weak following subdued demand from Malaysia’s key trading partners.

“Overall, the economy is projected to expand within expectations in 2016, and to remain on a steady growth path in 2017,” it added.

Malaysia’s headline inflation moderated to 1.1% in July, with the central bank expecting it to be at the lower end of the 2% to 3% range for 2016 and to remain relatively stable in 2017 given the environment of low global energy and commodity prices, and generally subdued global inflation.

BNM said domestic financial conditions have remained stable since the previous MPC meeting with financial markets continuing to function in an orderly manner.

“Financial institutions continue to operate with strong capital and liquidity buffers and the growth of financing to the private sector is consistent with the pace of economic activity. Banking system liquidity remains ample,” it added.

Meanwhile, BNM said the global economy continues to expand at a moderate pace and growth across the advanced economies has been modest.

Source:thesundaily