Bank Negara maintains OPR at 3%

Bank Negara Malaysia (BNM) during its Monetary Policy Meeting (MPC) on Wednesday decided to maintain the Overnight Policy Rate (OPR) at 3%.

The central bank said the degree of monetary accommodativeness is consistent with the policy stance to ensure that the domestic economy continues on a steady growth path amid stable inflation, supported by continued healthy financial intermediation in the economy.

“Financial institutions continue to operate with strong capital and liquidity buffers and the growth of financing to the private sector is consistent with the pace of economic activity,” said BNM in a statement.

It added, the MPC will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation.

According to the central bank, headline inflation moderated to 1.1% in July and it is expected to be at the lower end of the two to three percent range for 2016 and to remain relatively stable in 2017.

This is given the environment of low global energy and commodity prices, and generally subdued global inflation.

BNM also said that domestic demand, however, remained the key driver of growth, with private consumption and private investment growing at a faster pace.

However moving forward, private consumption will remain supported by wage and employment growth, with additional impetus coming from announced government measures to increase disposable income.

In June, the central bank made its first rate cut in seven years, slashing the OPR by 25 basis points to 3%.

The decision was made just two weeks after United Kingdom voted to leave the European Union.