Friday, November 11, 2011

Bank Negara maintains OPR at 3%

KUALA LUMPUR (Nov 11): Bank Negara Malaysia's Monetary Policy Committee (MPC) which met on Friday, Nov 11 has maintained the Overnight Policy Rate (OPR) at 3%.

In a statement Nov 11, Bank Negara said that latest indicators suggested that the global growth momentum had moderated in recent months.

It said economic activity in the advanced economies was being weighed down by heightened market volatility and lower confidence, amid rising policy uncertainties.

Labour market conditions in several of these economies also continue to be weak, it said.

'Going forward, these conditions may persist as critical policy issues remain unresolved and pose further downside risks to global growth.

'In the Asian region, sustained domestic demand is projected to continue to support economic growth. Nevertheless, greater weakness in the external environment is expected to affect regional growth prospects,' it said.

Bank Negara said the domestic economy improved in the third quarter, due primarily to stronger domestic demand.

Export performance also improved, reflecting firm regional demand and the normalisation of trade flows from supply chain disruptions, it said.

'Looking ahead, the weaker external environment could, however, impact the overall growth prospects.

'Domestic demand will continue to be the anchor of growth, supported by private consumption and investment and reinforced by public sector spending and investment activity.'' Employment conditions are also expected to remain stable,' said the central bank.

Bank Negara said that domestic headline inflation was 3.4% in September on account of the slower increase in the transport category.

Going forward, the central bank said inflation was expected to remain stable for the rest of the year and moderate in 2012.

'Global energy prices are expected to experience some moderation while the impact of domestic demand factors on inflation is also expected to remain contained.

'High food price inflation, largely due to supply disruptions, continues to remain a concern,' it said.

Bank Negara said that in the MPC's assessment, the global economic outlook is expected to be weaker and international financial market conditions will remain highly uncertain and volatile going forward.

While the domestic economy is expected to expand, these external developments could affect the overall growth prospects of the Malaysian economy, it said.

The MPC will continue to monitor these developments and assess the risks to the outlook for domestic growth and inflation, it said.



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