BNM maintains OPR at 3 percent

It said at the current level of the OPR, the degree of monetary accommodativeness was consistent with the policy stance to ensure that the domestic economy would continue on a steady growth path amid stable inflation, supported by continued healthy financial intermediation in the economy.

"The risk of destabilising financial imbalances has been contained. However, the MPC will be monitoring these risks to ensure the sustainability of the overall growth prospects," the central bank said in a statement today.

The global economy continues to grow at a moderate pace with economic activity in major advanced economies improving but remaining moderate.

In Asia, growth has been supported by domestic demand amid persistent weakness in the external sector.

Looking ahead, BNM said the baseline estimate was for global growth to improve slightly in 2017.

"The prospect of a shift towards progressive use of fiscal policy in the developed economies could lead to a more balanced policy environment that would support growth going forward," the central bank said.

BNM noted that there was uncertainty arising from risks of protectionism and financial market volatility.

Heightened financial market volatility in recent weeks has had an adverse effect on various asset classes, exchange rates and yields across many emerging economies.

"Global financial market conditions are likely to be susceptible to policy and market developments," BNM said.

The central bank said the domestic economy continued to expand in the third quarter of the year, driven mainly by private sector activity with some support from net exports.

Going forward, it said the private sector activity would remain the key driver of growth.

Private consumption is expected to be sustained by continued wage and employment growth, with additional support from government measures to increase disposable income.

"Investment activity, although moderating, will be supported by ongoing infrastructure investments and capital expenditure in the manufacturing and services sectors," BNM said in a statement today.

On the external front, the central bank said exports were expected to expand but would be constrained by soft demand from Malaysia's key trading partners.

"Overall, the domestic economy remains on track to expand as projected in 2016 and 2017," it added.

The central bank expects headline inflation for 2016 to be at the lower end of the projected range of between 2.0 and 2.5 percent.

It said inflation was expected to remain relatively stable in 2017 given the environment of low global energy and commodity prices, and generally subdued global inflation.

On ringgit, BNM said it would continue to provide liquidity to ensure the orderly functioning of the domestic foreign exchange market.

It noted that the ringgit, along with most emerging market currencies, had experienced sharp adjustments and significant volatility due to continuing uncertainties in the global economic and policy environment, as well as geopolitical developments.

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, BNM said.

On another development, BNM said the MPC meeting also approved the schedule of MPC meetings for 2017.