KUCHING: Bank Negara’s Monetary Policy Committee (MPC) decided to maintain the Overnight Policy Rate (OPR) at 3 per cent at its meeting on Wednesday.
In a statement, it said that for the Malaysian economy, the latest indicators point towards sustained strength in economic activity driven by resilient domestic expenditure and higher export activity.
“Going forward, exports are expected to be supported by the global tech upcycle, continued strength in non-electrical and electronics goods, and higher tourist spending.
“Employment and wage growth, as well as policy measures, remain supportive of household spending,” it said.
Furthermore, it said that the robust expansion in investment activity would be sustained by the progress of multi-year projects in both the private and public sectors, the higher realisation of approved investments, as well as the implementation of catalytic initiatives under the national master plans.
“These investments, supported by higher capital imports, will raise exports and expand the productive capacity of the economy.
“Budget 2025 measures will provide additional support to growth. The growth outlook is subject to downside risks from lower-than-expected external demand and commodity production.
“Meanwhile, upside risks to growth mainly emanate from greater spillover from the tech upcycle, more robust tourism activity, and faster implementation of investment projects,” it said.
In light of this, it said that headline and core inflation remain modest, averaging 1.8 per cent year-to-date.
“Going into 2025, inflation is expected to remain manageable, amid the easing global cost conditions and the absence of excessive domestic demand pressures.
“Nevertheless, the inflation outlook remains subject to the details of the implementation of announced domestic policy measures.
“Upside risk to inflation would be dependent on the extent of spillover effects of domestic policy measures, as well as global commodity prices and financial market developments,” it said.
On top of this, it pointed out that ringgit performance continues to be primarily driven by external factors.
It predicted that the outcome of the US elections could heighten volatility in the near term.
“Looking ahead, the narrowing interest rate differentials between Malaysia and the advanced economies is positive for the ringgit.
“Malaysia’s favourable economic prospects and domestic structural reforms, complemented by ongoing initiatives to encourage flows, will continue to provide enduring support to the ringgit.”
It noted that at the current OPR level, the monetary policy stance remains supportive of the economy and is consistent with the current assessment of inflation and growth prospects.
“The MPC remains vigilant to ongoing developments to inform the assessment on the domestic inflation and growth trajectories going into 2025. The MPC will ensure that the monetary policy stance remains conducive to sustainable economic growth amid price stability,” it said.
