Bank Negara maintains
key rate at 3pc
KUALA LUMPUR:
Bank Negara Malaysia (BNM) left borrowing costs unchanged yesterday, keeping
the Overnight Policy Rate on hold for the eighth consecutive meeting at three
per cent.
It said its current monetary policy stance is accommodative and supportive of the Malaysian economy.
In the widely-anticipated move, the central bank warned of "considerable uncertainties in the global economic and financial conditions".
Dr Chua Hak Bin of Bank of America Merrill Lynch expects BNM to maintain the OPR at three per cent for the rest of the year.
It said its current monetary policy stance is accommodative and supportive of the Malaysian economy.
In the widely-anticipated move, the central bank warned of "considerable uncertainties in the global economic and financial conditions".
Dr Chua Hak Bin of Bank of America Merrill Lynch expects BNM to maintain the OPR at three per cent for the rest of the year.
|
|
Inflation has eased,
coming in at 1.4 per cent in July (slowest in more than two years) while
domestic demand remains strong, lifting the second quarter gross domestic
product (GDP) growth to 5.4 per cent year-on-year versus 4.7 per cent in the
first quarter).
"BNM is also reluctant to cut rates, as this may result in an increase in household debt, which is one of the highest in Asia (about 76 per cent of GDP)," he remarked.
In its analysis, the central bank described economic activity in most major advanced economies as slower while conditions in the international financial markets remain volatile.
"While the Malaysian economy is affected by these global developments, domestic demand has continued to support economic growth," it said, adding that the trend is expected to continue.
While private consumption is supported by income growth and stable employment conditions, investment activity is mainly in the domestic-oriented industries, the oil and gas sector and the ongoing implementation of infrastructure projects.
On inflation, the central bank said domestic demand is not expected to result in inflationary conditions. It, however, warned that upside risks to inflation could emerge should supply disruptions result in higher global prices for commodities.
Patricia Oh of TA Securities said shocks from the lacklustre external growth are likely to be a drag on growth considering Malaysia's significant exposure to exports.
CIMB Investment Bank chief economist Lee Heng Guie described the stance as appropriate as external pressures from advanced economies warrant close surveillance.
"While domestic drivers firmly support growth, the risk of worsening external conditions could disrupt Malaysia's growth momentum."
Lee said although inflation is likely to remain manageable, it could pick up in the fourth quarter.
"We think BNM will stay on the sidelines, leaving the policy rate at three per cent until year-end. If growth momentum is firmly entrenched, the central bank is likely to come under pressure in 2013 to raise rates to three to 3.5 per cent."
The monetary policy committee will hold its last meeting for the year on November 8.
"BNM is also reluctant to cut rates, as this may result in an increase in household debt, which is one of the highest in Asia (about 76 per cent of GDP)," he remarked.
In its analysis, the central bank described economic activity in most major advanced economies as slower while conditions in the international financial markets remain volatile.
"While the Malaysian economy is affected by these global developments, domestic demand has continued to support economic growth," it said, adding that the trend is expected to continue.
While private consumption is supported by income growth and stable employment conditions, investment activity is mainly in the domestic-oriented industries, the oil and gas sector and the ongoing implementation of infrastructure projects.
On inflation, the central bank said domestic demand is not expected to result in inflationary conditions. It, however, warned that upside risks to inflation could emerge should supply disruptions result in higher global prices for commodities.
Patricia Oh of TA Securities said shocks from the lacklustre external growth are likely to be a drag on growth considering Malaysia's significant exposure to exports.
CIMB Investment Bank chief economist Lee Heng Guie described the stance as appropriate as external pressures from advanced economies warrant close surveillance.
"While domestic drivers firmly support growth, the risk of worsening external conditions could disrupt Malaysia's growth momentum."
Lee said although inflation is likely to remain manageable, it could pick up in the fourth quarter.
"We think BNM will stay on the sidelines, leaving the policy rate at three per cent until year-end. If growth momentum is firmly entrenched, the central bank is likely to come under pressure in 2013 to raise rates to three to 3.5 per cent."
The monetary policy committee will hold its last meeting for the year on November 8.
Source : New
Straits Times
Date : 7 September 2012
afternoon highlight
(10/09/12/155/630)
No comments:
Post a Comment