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At the Monetary Policy
Committee (MPC) meeting today (02/09/2010), Bank Negara Malaysia decided
to maintain the Overnight Policy Rate (OPR) at 2.75 percent.
The global growth momentum has moderated in recent months. In the
advanced economies, growth has slowed by more than expected following
continued weakness in the labour market and the fading impact of the
temporary boost to economic activity provided by the inventory build up
and the policy stimulus. For the regional economies, after registering
strong economic expansion in the first half of the year, the slower pace
of export growth will have some impact on economic performance. Domestic
economic activity, however, remains strong. Given these developments,
the assessment going forward is for the global recovery to proceed at a
more moderate pace.
The Malaysian economy expanded strongly in the first half of this year,
underpinned by strengthening domestic demand, particularly in the
private sector. As in other regional countries, Malaysia's export growth
has, however, slowed in recent months. These conditions are expected to
continue with the slowing of global growth. While these external
developments may result in a moderation in the pace of growth of the
Malaysian economy, moving forward, the overall growth will continue to
be supported by the robust domestic economic activity. Leading
indicators suggest that private consumption and private investment will
continue to expand. This is also supported by the favourable labour
market conditions, positive consumer and business sentiments, low
inflation and conducive credit conditions.
Domestic inflation edged higher in June and July mainly on account of
increases in food and energy prices. Despite the adjustment in retail
fuel prices in July, inflation is expected to rise at a modest pace in
the coming months. Going into 2011, inflation is projected to continue
to remain moderate.
The MPC considers the current monetary policy as appropriate and
consistent with the latest assessment of the economic growth and
inflation prospects. At the current level of the OPR, the stance of
monetary policy continues to remain accommodative and supportive of
economic growth.
Sources: Bank Negara Malaysia
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