Highlight BNM keeps key policy rate at 3%

by **Cals** Wed 29 Jan 2014, 18:22

Highlight BNM keeps key policy rate at 3%

Business & Markets 2014

Written by Ho Wah Foon of theedgemalaysia.com

Wednesday, 29 January 2014 18:07

KUALA LUMPUR (Jan 29): Bank Negara Malaysia (BNM) decided to maintain the Overnight Policy Rate (OPR) at 3.00% at its regular monetary policy committee (MPC) meeting today.

But the central bank warned that inflation is expected to rise higher due to rising costs this year.

In a statement, it noted that inflation, which rose to 3.2% in December 2013 and average at 2.1% for 2013, has been gradually rising “due to disruptions in supply following adverse weather conditions and higher domestic costs.”

“Going forward, inflation is expected to average higher largely due to domestic cost factors. But the subdued external price pressures and moderate domestic demand conditions will help contain the impact of these cost factors on underlying inflation,” it said.

For the Malaysian economy, BNM said the economy registered sustained performance in the fourth quarter of 2013.

“Improvements in exports have supported economic growth during the quarter while domestic demand remained firm.

“The country’s growth momentum is expected to continue in 2014, amid better performance in the external sector and robust investment activity.

“Domestic demand, however, is expected to moderate, reflecting the ongoing public sector consolidation and a slower growth in private consumption.”

Looking at the global economy, the central bank opined broader signs of improvement have emerged in the major advanced economies.

But in the Asian economies, growth in domestic demand in some economies is showing signs of moderation, it added.

“Looking ahead, global growth will be supported by the emerging economies and the recovery in the advanced economies. Nevertheless, global economic and financial conditions remain vulnerable to shifts in sentiments and heightened volatility in the international financial markets,” said BNM.