KUALA LUMPUR, July 9 (Xinhua) -- Malaysian Central Bank on Tuesday decided to maintain its overnight policy rate (OPR) at 3 percent.
The central bank, Bank Negara Malaysia, said in a statement that at the current level of the OPR, the stance of monetary policy remains accommodative and supportive of economic activity.
Its 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.
Bank Negara also said that the baseline projection for economic growth remains within the range of 4.3 percent to 4.8 percent.
This projection, however, is subject to downside risks from ongoing uncertainties in the global and domestic environment, worsening trade tensions and extended weakness in commodity-related sectors.
"Looking ahead, while the external sector performance is likely to be weighed down by slower global growth and trade tensions, economic growth will be supported by domestic demand," Bank Negara said.
It added that household and capital spending will continue to be driven by stable labor market conditions and capacity expansion in key sectors such as manufacturing and services.
While the prospects of monetary easing in the major economies have somewhat eased global financial conditions, heightened policy uncertainty could lead to excessive financial market volatility, it added.
Meanwhile, the headline inflation which has remained low in the recent period is projected to rise in the coming months as the impact of the changes in consumption tax policy lapses.
The central bank's move is within economists' expectations, as they anticipate the central bank to maintain the OPR at 3 percent throughout the year due to less pressure from domestic and external factors.
MIDF Research said in a note Tuesday that as long as Malaysia's economic growth stays more than 4 percent and core inflation rate remains positive, the bank will maintain its monetary stance.
"The 25 basis point cut in May is sufficient to boost economic growth particularly domestic demand. In addition, the United States Federal Reserve has signaled possible rate cut by at least once this year," it added.
The central bank in its last MPC meeting in May decided to reduce the OPR to 3 percent from 3.25 percent.
