Malaysia: BNM leaves policy rate unchanged in November
At its 8 November meeting, the Monetary Policy Committee of Bank Negara Malaysia stood pat and left the overnight policy rate unchanged at 3.25%, where it has been since January. The decision met market expectations.
The committee’s decision came amid very low headline inflation, which remained below 1% in September. Moreover, underlying inflationary pressures were also muted due to soft demand pressures, and the Bank highlighted downside risks to growth going forward. Coupled with stability in the FX and financial markets, this led the Bank to decide it was premature to start raising rates. Despite this, the economy is currently performing fairly well, buoyed by private consumption. As a result, there was no need for a rate cut despite low inflation.
In its communiqué, the Bank maintained the neutral tone of its last meeting. The Bank stated that it expects the domestic economy “to remain on a steady growth path in 2018 and 2019”, with headline inflation increasing next year but core inflation staying subdued. The Bank pledged to “continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation”.
The next monetary policy meeting is scheduled for 23–24 January 2019.