KUALA LUMPUR: As widely anticipated, Bank Negara Malaysia has left borrowing costs unchanged in its latest monetary policy decision.
The overnight policy rate (OPR), the benchmark interest rate, was left unchanged at 3 per cent as it continues to support economic activities.
Citing improved domestic economy activities in the first quarter, the central bank said the economy is expected to register higher growth in 2017.
The economy grew by a robust 5.6 per cent in the first quarter as growth was lifted by stronger domestic demand with additional impetus from exports.
“Going forward, the more favourable global growth prospects will lead to sustained export performance and generate positive spillovers to the domestic economy.”
Private consumption will be underpinned by higher wages and employment.
“The improved investment outlook is being driven by new and ongoing infrastructure projects, and stronger capacity expansion in the manufacturing and services sectors,” it added.
Headline inflation moderated to 3.9 per cent in May, and the level is expected to moderate in the second half of the year mainly reflecting the waning effect of global cost factors.
“Underlying inflation, as measured by core inflation, will be sustained by the more robust domestic demand but is expected to remain contained.”
In its latest assessment, it described the domestic financial market as resilient.
“The ringgit has remained stable with a more balanced demand and supply of foreign currencies following the implementation of the two financial market development measures.”
On the global front, it noted the strengthening global economy underpinned by industrial activity and global trade.
In terms of risks to its global outlook, it cautioned that they could stem from political and policy uncertainties in the major economies, geopolitical and financial market developments, and volatility of commodity prices.