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Malaysia: Bank Negara maintains OPR at 1.75%
KUALA LUMPUR: Bank Negara Malaysia maintained the overnight policy rate (OPR) of 1.75% at its monetary policy committee (MPC) meeting on Thursday as latest indicators point to improvements in external demand and continued consumer spending.
In its statement on Thursday, Bank Negara said for Malaysia, latest indicators point to improvements in external demand and continued consumer spending.
“While the re-imposition of containment measures will affect growth in the first quarter, the impact is expected to be less severe than that experienced in the second quarter of 2020, ” it said.
Looking ahead, it said growth was projected to improve from 2Q onwards, driven by the recovery in global demand, increased public and private sector expenditure amid continued support from policy measures and more targeted containment measures.
Bank Negara said growth will also be supported by higher production from existing and new manufacturing facilities, particularly in the E&E and primary-related sub-sectors, as well as oil and gas facilities.
It was also positive on the roll-out of the domestic Covid-19 vaccine programme, which it said will also lift sentiments and economic activity.
“The growth outlook, however, remains subject to downside risks, stemming mainly from ongoing uncertainties in developments related to the pandemic, and potential challenges that might affect the roll-out of vaccines both globally and domestically, ” it said.
The decision to maintain the OPR was in line with most economists as they expected the economic outlook to improve following further easing of movement restrictions, amid the declining number of new Covid-19 cases and the recently launched vaccination programme.
Overall, a Reuters poll of 15 economists showed 11 of them expecting Bank Negara to leave the OPR unchanged at 1.75%, while only four are forecasting a 25-bps cut today to a new record low of 1.50%.
The central bank had in total cut the OPR by 125bps last year to boost a slowing economy and mitigate the impact of the Covid-19 fallout.
Source: https://www.thestar.com.my/business/business-news/2021/03/04/bank-negara-maintains-opr-at-175