Malaysia: BNM stands pat in September
At its 5 September meeting, the Monetary Policy Committee (MPC) of Bank Negara Malaysia (BNM) opted to leave the overnight policy rate (OPR) unchanged at 3.25%, where it has been since January. The decision was in line with market expectations.
Although solid private consumption and export growth are driving the economy, the decision was justified on the basis that inflationary pressures are subdued, especially since the government zero-rated the goods and services tax on 1 June. It was therefore premature to continue raising rates. On the other hand, given that there should be an intensification of inflationary pressures following the sales and services tax which was reinstated on 1 September, and that core inflation should remain fairly stable, the Bank saw no need to cut rates either.
The accompanying statement’s tone was largely unchanged from the last meeting. The Bank expects the economy to continue to be driven by private consumption and net exports, and for headline inflation to gradually rise going forward, in line with FocusEconomics panelists’ projections. FocusEconomics Consensus Forecast panelists largely do not expect a rate hike this year, although most see at least one hike by the end of 2019.
The next monetary policy meeting is scheduled for 8 November.