Malaysia: BNM maintains its policy rate unchanged in May
May 12, 2017
Bank Negara Malaysia (BNM) decided to keep the Overnight Policy Rate unchanged at 3.00 at its 12 May monetary policy meeting, as widely expected by market analysts. The statutory reserve requirement (SRR) was also left unchanged at 3.50%.
The decision to hold the Overnight Policy Rate unchanged reflects the Bank’s growing optimism regarding the current state of the Malaysian economy after a year of subdued growth prompted by low oil prices and weak global trade activity. Recent economic data suggests that Q4’s positive momentum carried over into this year and will likely be sustained for the rest of the year thanks to a strong wage growth and surging exports. And although inflation remains somewhat high, it slowed in April and is expected to keep moderating as temporary supply disruptions that pushed food prices higher eventually fade.
Bank Negara’s official statement was devoid of clear forward guidance and highlighted that their current policy stance is accommodative and supportive of the economy. It also added that the Bank will continue to assess risks associated with the outlook for domestic growth and inflation.
Author: Luis Lopez Vivas, Economist