By Chan Quan Min
Malaysia’s central bank today decided during its bi-monthly monetary policy meeting to keep the benchmark interest rate at 3.25%.
Bank Negara last increased its Overnight Policy Rate or OPR by 25 basis points in July citing “financial imbalances.” Before the mid-year increase the OPR was left untouched at 3% for more than three years.
Today, Bank Negara decided to maintain rates as “the current stance of monetary policy remains supportive of growth,” according to a statement.
“Inflation has continued to stabilise as the effects of the price adjustments for utilities and energy have continued to diminish,” the statement read. “Inflation is expected to remain relatively stable for the remainder of the year.”
Latest reported figures put the inflation rate at 3.3% for August.
Bank Negara however gave a warning for inflation to rise from next year. “Going into next year, inflation is projected to edge higher and is expected to be above its long-term average due to domestic cost factors,” the central bank said.
“The absence of external price pressures and more moderate demand conditions are expected to mitigate the impact of these cost factors on the underlying inflation.”
Unlike previous monetary policy statements, Bank Negara today appeared to be ambivalent to any further interest rate adjustments.
“Further adjustment to the degree of monetary accommodation may be taken depending on how new information will affect the assessment on the balance of risks. This is to ensure the sustainability of the growth prospects of the Malaysian economy,” the central bank said.
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