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Malaysia Monetary Policy September 2019

Malaysia: Bank Negara Malaysia holds policy rate steady in September

The Monetary Policy Committee (MPC) of Bank Negara Malaysia (BMN) kept the overnight policy rate unchanged at 3.00% at its 12 September meeting, as was expected by market analysts.

The Bank’s decision to stand pat was likely guided by its desire to maintain a wait-and-see approach and to allow room for further easing later this year if the global backdrop worsens. Moreover, a stronger-than-expected economic performance in the second quarter and July’s nascent recovery in merchandise exports gave the Bank additional reason to maintain its current stance in September. The Bank reiterated that strong domestic demand should keep the economy growing between 4.3% and 4.8%, although a further escalation in the U.S.-China trade dispute, lower commodity prices, and a weaker global economic picture remain key downside risks to the outlook. Meanwhile, inflationary pressures have been subdued thus far this year, although the Bank expects prices to pick up somewhat through year-end and into 2020.

In its communiqué, the Bank gave no explicit forward guidance, however once again expressed that its current monetary policy stance was accommodative and that it stood ready to support the economy and price stability. Most of our panelists see rates staying at their current level for the rest of the year, although some panelists are forecasting additional easing.

The next monetary policy meeting is scheduled for 5 November.

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