Malaysia’s central bank, Bank Negara Malaysia, has decided to keep its benchmark interest rate unchanged at 3.00%. This decision, made during its latest meeting, is in line with the country’s inflation and growth outlook. It follows a previous hike in May earlier this year and signifies a pause in the bank’s monetary policy adjustments.
Supportive Monetary Policy Stance
The central bank highlighted that the current overnight policy rate (OPR) level continues to support the Malaysian economy. Despite slower external demand and decreased commodity production in the second quarter, resilient domestic demand remains the primary driver of economic growth. The bank emphasized that employment and wage growth, particularly in domestic-oriented sectors, continue to support household spending.
Positive Outlook for Tourism and Investments
Bank Negara Malaysia expects tourist arrivals to further improve in the near future. Additionally, significant progress in major infrastructure projects and the execution of catalyst projects under the national plan are anticipated to stimulate investment activity. The bank believes that these developments, coupled with conducive domestic financial conditions and sustained credit growth, will play a vital role in maintaining growth momentum until 2024.
Inflationary Expectations
Looking at inflation, Bank Negara predicts both headline and core inflation to trend lower in the second half of 2023. This projection is attributed to a high base effect and the continued easing of price increases.
