Thursday, September 8, 2011

BNM maintains OPR at 3%

KUALA LUMPUR: Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 3% at its monetary policy committee meeting (MPC) on Thursday, Sept 8.

The central bank said the more challenging external environment had increased the downside risks to the domestic economy though there was also concern about inflation which had moderated slightly to 3.4% in July.

'In the MPC's assessment, while inflation remains a concern, the increased uncertainties on the global and domestic economic growth prospects and their potential consequences could have a moderating impact on inflation.

'The MPC will continue to assess carefully the evolving developments surrounding inflation and the economy, and adjust monetary conditions accordingly to ensure the sustainability of growth of the Malaysian economy in an environment of price stability,' it said.

On the global economy, it said global growth had moderated in the recent months as growth in the advanced economies slowed by more than expected following the greater policy uncertainties, worsening of confidence and heightened financial market volatilities, amidst continued weaknesses in labour market conditions.

BNM said the advanced economies are expected to register a slower pace of growth than earlier anticipated.

However, in Asia, sustained domestic demand was expected to continue to support economic growth amid weaker external performance.

'Prolonged uncertainties in the financial markets, weakness in the labour market and the prevailing fiscal conditions in the advanced economies have heightened the downside risks and fragility of the global economy,' it said.

As for the Malaysian economy, BNM said recent indicators pointed to slower growth in external demand following the weaker global economic environment.

However, it expected domestic growth prospects to remain positive, underpinned by the expansion in private consumption and private investment.

As for employment, it said the conditions remained favourable amid sustained business and consumer confidence. The public sector would also continue to support economic growth.

'Moving forward, the more challenging external environment has, however, increased the downside risks to the domestic economy,' it cautioned.

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