Malaysia holds policy rate at 3 percent

Source: Xinhua | 2019-11-06

Malaysian Central Bank has on its Tuesday meeting maintained the Overnight Policy Rate (OPR) at 3 percent.
Bank Negara said in a statement, at the current level of the OPR, the stance of monetary policy remained accommodative and supportive of economic activity.
"The Monetary Policy Committee (MPC) will continue to assess the balance of risks to domestic growth and inflation, to ensure that the monetary policy stance remains conducive to sustainable growth amid price stability," it added.
The central bank said, monetary easing and other policy measures are expected to provide some support to growth as geopolitical tensions, policy uncertainty and the unresolved trade disputes could exacerbate financial market volatility and further weigh on the global growth outlook.
"The global economy is expanding at a more moderate pace, with the slowdown becoming more synchronised across both the advanced and emerging economies. There is also evidence of the weak global trade affecting domestic demand, particularly investment activity," said the bank.
The central bank also said, growth of the Malaysian economy is expected to be within projections in 2019 and the pace sustained going into 2020.
However, projection remained subject to downside risks, mainly stemming from uncertainties in global economic and financial conditions as well as weakness in commodity-related sectors.
"Growth is expected to remain anchored by firm private sector expenditure. While private investment is projected to remain modest, household spending will be supported by continued employment and wage growth," it said, adding that the recent government measures would provide additional impetus to economic activity.
On the external front, the central bank said, the country's exports would continue to be affected by slower global demand, but this would be partly mitigated by its diversified structure.
While Malaysian Central Bank's move is in line with expectation, MIDF Research anticipated a rate cut in 2020.
"Rate cut is possible in order to stimulate the domestic economy and counteract the external pressure," it said.