At the current OPR level, the degree of monetary accommodativeness is consistent with the intended policy stance, the central bank said.
“The MPC will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation,” it said in a statement yesterday.
The MPC meeting is the sixth held this year and the third chaired by Governor Datuk Nor Shamsiah Mohd Yunus.
BNM said the domestic economy continued to face downside risks stemming from any further escalation in trade tensions and prolonged weakness in the mining and agriculture sectors.
“Nevertheless, on balance, the Malaysian economy is expected to remain on a steady growth path in 2018 and 2019,” it said.
It added that the annual average headline inflation would also be low in 2018. The central bank said in line with regional economies, the domestic financial markets continued to experience non-resident portfolio outflows due to global developments.
However, it said the financial markets remained orderly with domestic monetary and financial conditions supportive of economic growth.
“The financial sector is sound, with financial institutions operating with strong capital and liquidity buffers.
“Importantly, the domestic economy maintains its underlying fundamental strength, with steady economic growth, low unemployment and surplus in the current account of the balance of payments,” it said.
It said the Malaysian economy’s latest indicators point towards continued expansion in private sector activity with private consumption remaining as the main driver of growth, supported by conducive labour market conditions.
“Investment activity is projected to be sustained by continued capacity expansion in key sectors, driven by positive demand and efforts to enhance automation.
“Public sector spending, however, is likely to weigh on growth, amid continued reprioritisation of expenditure by the government,” it said.
It added that the recent announcements by the government have provided more clarity on fiscal and economic development policies.
On the external front, it said exports are projected to provide an additional lift to growth, albeit to a lesser extent, due to moderating global growth momentum.
Moving into 2019, BNM said headline inflation is projected to increase primarily due to higher projected global oil prices and the floating of domestic fuel prices.
“While the impact of the consumption tax policy will contribute to higher headline inflation in 2019, it will lapse towards the end of 2019,” it said.
It added that underlying inflation is expected to remain contained in the absence of strong demand pressures.
At the meeting, the committee also approved the 2019 schedule, under which it would convene six times during the year.
“The meetings will be held over two days, with the Monetary Policy Statement released at 3 pm on the second day of the MPC meeting,” it said.
The first meeting next year will convene on Jan 23 and 24, followed by March 4 and 5, May 6 and 7, July 8 and 9, Sept 11 and 12, and Nov 4 and 5. — Bernama
Source: Borneo Post Online