Malaysia: Central Bank maintains rates in November
November 7, 2013
At its 7 November monetary policy meeting, the Central Bank left the Overnight Policy Rate (OPR) unchanged at 3.00%, a decision that was consistent with market expectations. The Bank has maintained its policy rate at the current level since May 2011.
Bank Negara Malaysia stated that growth in major economies remains, "gradual and uneven." The Malaysian economy is currently being supported by improvements in the export sector and investment activity. However, given consolidation in the public sector and a slowdown in consumption, domestic demand is expected to moderate going forward. Regarding price developments, the Central Bank stated that inflation, driven mainly by higher prices for petrol, increased to 2.6% in September. However, annual inflation remained low at 1.8%. Inflation is expected to rise due to input cost factors going forward, although any increase will be tempered by a stable external price environment and moderating domestic demand.
For 2013, panelists expect the monetary policy rate to end the year at 3.08%. For 2014, the panel expects the policy rate to end the year at 3.29%.
Author: Carl Kelly, Economist