Bank Negara keeps key interest rate at 3pc
KUALA LUMPUR: Bank Negara Malaysia left borrowing
costs unchanged yesterday, leaving the Overnight Policy Rate (OPR), the key
benchmark interest rate, at 3.00 per cent.
"There continues to be considerable uncertainties in the global economic and financial environment," the central bank's monetary policy committee concluded yesterday.
A Business Times poll of research houses across Malaysia and Singapore expected the decision to stay pat and they also expect the level to remain unchanged till year-end.
Diagnosing the domestic front, the central bank said recent data and surveys of business conditions suggest that consumption and investment activity remains resilient.
"There continues to be considerable uncertainties in the global economic and financial environment," the central bank's monetary policy committee concluded yesterday.
A Business Times poll of research houses across Malaysia and Singapore expected the decision to stay pat and they also expect the level to remain unchanged till year-end.
Diagnosing the domestic front, the central bank said recent data and surveys of business conditions suggest that consumption and investment activity remains resilient.
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It expects domestic demand to continue to be the anchor of growth for the
economy, with strong investment activities mainly led by domestic-oriented
industries, the oil and gas sector and steady progress in the construction of
infrastructure projects.
Household spending continues to be supported by stable employment conditions and income growth.
Bank Negara also expects headline inflation to remain moderate for the rest of the year.
"With some excess capacity in the economy, the strength of domestic demand is not expected to result in inflationary conditions,"it added.
It warned, however, that upside risks to inflation could emerge should disruptions to global supply result in higher global prices for these commodities.
Its decision to maintain the OPR will mark the seventh consecutive meeting where it has left it at the same level. The last change was in more than a year ago (May 2011).
CIMB Investment Bank chief economist Lee Heng Guie anticipates the central bank to stand pat on interest rates until year-end.
"Its policy statement was certainly dovish, suggesting no hurry to change its monetary course unless domestic conditions turn ugly."
On the external front, Bank Negara said the latest data pointed to slower economic activity and more challenging growth prospects in several regions worldwide.
"Although pressures in the international financial markets have receded following the recent policy announcements to address the European crisis, a number of important policy issues remain unresolved and continue to unsettle financial markets."
Household spending continues to be supported by stable employment conditions and income growth.
Bank Negara also expects headline inflation to remain moderate for the rest of the year.
"With some excess capacity in the economy, the strength of domestic demand is not expected to result in inflationary conditions,"it added.
It warned, however, that upside risks to inflation could emerge should disruptions to global supply result in higher global prices for these commodities.
Its decision to maintain the OPR will mark the seventh consecutive meeting where it has left it at the same level. The last change was in more than a year ago (May 2011).
CIMB Investment Bank chief economist Lee Heng Guie anticipates the central bank to stand pat on interest rates until year-end.
"Its policy statement was certainly dovish, suggesting no hurry to change its monetary course unless domestic conditions turn ugly."
On the external front, Bank Negara said the latest data pointed to slower economic activity and more challenging growth prospects in several regions worldwide.
"Although pressures in the international financial markets have receded following the recent policy announcements to address the European crisis, a number of important policy issues remain unresolved and continue to unsettle financial markets."
Source : New Straits Times
Date : 6 July 2012
(Today’s Pick: 06/07/12/122/816)
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