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At the Monetary Policy
Committee (MPC) meeting today (08 July 2010), Bank Negara Malaysia
decided to raise the Overnight Policy Rate (OPR) by 25 basis points to
2.75 percent. The floor and ceiling rates of the corridor for the OPR
are correspondingly raised to 2.50 percent and 3.00 percent
respectively.
The global recovery has continued in the second quarter, supported by
robust and broad-based growth in most emerging economies, in particular
Asia , and a moderate recovery in the advanced economies. Nevertheless,
volatility in the international financial markets has increased
following concerns over the ongoing sovereign debt crisis in several
advanced economies. These developments have raised uncertainties on the
potential impact on the international financial system and the global
economic activity. Going forward, while the assessment is for the global
recovery to continue, there is increased risk that the global growth
momentum could moderate.
In the domestic economy, recent trends in industrial production,
financing activity, labour market conditions and external trade indicate
that economic activity has remained robust in the second quarter. Going
forward, while external developments may result in some moderation in
the pace of growth, the domestic economy is expected to remain strong
with continued improvements in private consumption and investment, and
augmented by public investment spending.
Domestic inflation recorded modest increases in April and May, mostly on
account of supply factors. Prices are expected to rise at a gradual pace
in the coming months, in line with the continued improvement in domestic
economic conditions, and taking into account possible adjustments in
administered prices. Overall, inflation is, however, expected to remain
moderate going into 2011.
The MPC considers the new level of the OPR to be appropriate and
consistent with the current assessment of the growth and inflation
prospects. The stance of monetary policy continues to remain
accommodative and supportive of economic growth.
Sources: Bank Negara Malaysia
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