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Malaysia: Bank Negara maintains benchmark key rate at 1.75%
KUALA LUMPUR: Bank Negara has maintained the overnight policy rate (OPR) at 1.75% at its monetary policy committee (MPC) meeting yesterday, as latest indicators point to improvements in external demand and continued consumer spending.
In a statement, the central bank said while the re-imposition of containment measures would affect growth in the first quarter of this year, the impact is expected to be less severe than that experienced in the second quarter of 2020.
Looking ahead, it said growth was projected to improve from the second quarter 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.
Growth will also be supported by higher production from existing and new manufacturing facilities, particularly in the electrical and electronics (E&E) and primary-related sub-sectors, as well as oil and gas facilities, it said.
Bank Negara was also positive on the roll-out of the domestic Covid-19 vaccination programme, which it said will lift sentiment 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 have forecast a 25 basis point (bps) cut to a new record low of 1.50%.
The central bank had cut the OPR by 125 bps in total 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/2021/03/05/bank-negara-maintains-benchmark-key-rate-at-175