Bank Negara maintains OPR at 3.25%

Bank Negara Malaysia has maintained the Overnight Policy Rate at 3.25% and is optimistic of sustained economic expansion for 2019.

KUALA LUMPUR: Bank Negara Malaysia (BNM) has decided to maintain the Overnight Policy Rate (OPR) at 3.25%.

The decision was made at the first meeting of BNM’s Monetary Policy Committee (MPC) for the year today.

In a statement, BNM said the current OPR level was consistent with its intended policy stance.

“The MPC will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation,” it said.

BNM said the latest indicators pointed towards sustained economic expansion with domestic demand expected to remain the key driver of growth for 2019.

Private consumption would continue to be underpinned by stable employment and wage growth while private investment would be spurred by ongoing multi-year projects in both export and domestic-oriented industries.

It said sustained growth in private sector activity was expected to offset lower public spending arising from the ongoing fiscal consolidation by the government.

“With moderating global growth, the external sector is likely to soften. Risks to growth are tilted to the downside, primarily from potential escalation of trade tensions and commodity-related shocks.

“On balance, the Malaysian economy is expected to remain on a steady growth path in 2019,” it said.

BNM said the domestic financial market remained resilient despite bouts of volatility due to global developments.

It said the financial sector was sound with financial institutions operating with strong capital and liquidity buffers.

The domestic economy maintained its underlying fundamental strength, with steady economic growth, low unemployment and surplus in the current account of the balance of payments, it said.

On headline inflation, BNM said it averaged at 1% in 2018 and was expected to average moderately higher in 2019.

“The impact of the consumption tax policy on headline inflation in 2019 will start to lapse towards the end of the year.

“However, the trajectory of headline inflation will be dependent on global oil prices,” it said, adding that underlying inflation was expected to be contained in the absence of strong demand pressures. - FMT