By Rupa Damodaran
KUALA LUMPUR: Bank Negara left the Overnight Policy Rate, the key benchmark interest rate, unchanged at 3.00 per cent, saying the growth momentum of the economy has been lifted.
The monetary policy committee, in its last meeting of the year, projected a strong growth for the economy in 2018.
With domestic demand as the engine of growth, private consumption will remain the largest driver of growth, supported by continued improvements in income and overall labour market conditions.
“Investment will be sustained by infrastructure projects and higher capital investment in the manufacturing and services sectors, “it said, adding that the external sector will provide additional impetus to the economy. Overall, the assessment is for growth to remain strong in 2018.
Economic prospects remain favourable it said, as it described the global economy as strengthening with fairly calm financial markets since its last statement in September.
On inflation, it said headline inflation next year is projected to moderate on expectations of a smaller effect from global cost factors.
“The trend of headline inflation will be dependent on future global oil prices which remain highly uncertain. Underlying inflation, as measured by core inflation, will be sustained by robust domestic demand.”
For 2017, headline inflation is expected to be at the upper end of the forecast range. It inflation increased to 4.3 per cent in September, arising from higher global prices of refined oil caused by disruptions in the global supply.
The domestic financial markets have been resilient it said, adding that the ringgit has strengthened to better reflect the economic fundamentals.
On the policy rate today, it said that while the stance remains accommodative now, the central bank consider “reviewing the current degree of monetary accommodation”.
“This is to ensure the sustainability of the growth prospects of the Malaysian economy,”it said, without elaborating further.
At the current level of the OPR, the stance of monetary policy remains accommodative. Given the strength of the global and domestic macroeconomic conditions, the Monetary Policy Committee may consider reviewing the current degree of monetary accommodation. This is to ensure the sustainability of the growth prospects of the Malaysian economy.
The meeting also approved the schedule of meetings for 2018. The Monetary Policy Statement released at 3 p.m. on the second day of the MPC meeting.