KUALA LUMPUR: Bank Negara Malaysia has maintained the Overnight Policy Rate (OPR) - the key benchmark interest rate - at 3 per cent, saying it will support economic activities.
The central bank is also upbeat in the latest monetary policy statement projecting the growth momentum from the middle of last year to be sustained for the rest of the year.
It will be underpinned by domestic demand amid continued wage and employment growth, and the implementation of new and on-going investment projects.
Exports have also improved and will contribute positively to Malaysia's economic performance.
In the case of headline inflation which increased to 4.3 per cent in the first quarter of the year, it said the increase was due to pass-through impact of higher global oil prices and temporary supply disruptions that led to higher food prices.
"The higher headline inflation is expected to moderate in the second half of the year," it said.
However, Bank Negara warned that the trend would depend on the highly uncertain global oil prices.
The ringgit continues to stabilise while the banking system liquidity remains sufficient.
Financial institutions continue to operate with strong capital and liquidity buffers and the growth of financing to the private sector is consistent with the pace of economic activity.