Bank Negara Maintains OPR at 3 Percent
Bank Negara Malaysia (BNM) has maintained the Overnight Policy Rate (OPR) at 3.00 per cent.
BNM said at the current OPR level, the degree of monetary accommodativeness was consistent with policy stance to ensure the domestic economy continues on a steady growth path, amid stable core inflation, supported by sustained financial intermediation in the economy.
"While the risks of destabilising financial imbalances are contained, the Monetary Policy Committee (MPC) will monitor these risks to ensure the sustainability of the overall growth prospects.
"The MPC will continue to assess the balance of risks surrounding the outlook for domestic growth and inflation" the central bank said in a statement, after the first MPC meeting for the year yesterday.
BNM said the global economy continued to grow at a moderate pace, while economic activity in the major advanced economies had improved and growth in Asia, supported by domestic demand amid some recovery in external demand.
Nevertheless, heightened uncertainty and downside risks to global growth remain, arising from risks of protectionism, geopolitical developments and commodity price volatility, it added.
"These risks could also lead to episodes of increased financial market volatility" the central bank said.
For Malaysia, BNM said the latest indicators point to continued expansion in the fourth quarter of 2016.
The central bank said headline inflation averaged 2.1 percent in 2016 and is expected to average higher in 2017, amid the prospect of higher global oil prices.
"The ringgit, along with other emerging market currencies, has seen a reduction in volatility since the sharp adjustments experienced towards the end of 2016" it said.
In another development, BNM said it will continue to provide liquidity to ensure the orderly functioning of the financial market.
It said uncertainties in the global economy, the policy environment and geopolitical developments might result in bouts of volatility in the regional financial and foreign exchange markets.