Published: Thursday July 5, 2012 MYT 6:00:00 PM
Updated: Thursday July 5, 2012 MYT 6:03:28 PM
BNM maintains overnight policy rate at 3%
KUALA LUMPUR: Bank Negara Malaysia decided to maintain the overnight policy rate (OPR) at 3% during its monetary policy committee (MPC) meeting on Thursday, which was widely expected by economists.
BNM said headline inflation was expected to remain moderate for the remainder of 2012.
"With some excess capacity in the economy, the strength of domestic demand is not expected to result in inflationary conditions," it said.
Economists said the last time the central bank reviewed the OPR was in May 2011, with a 25bps hike. Since then, the benchmark policy rate has been maintained at 3%.
The central bank, in its outlook for global energy and commodity prices, ssaid they were likely to be contained given the weak global conditions.
However, it was concerned upside risks to inflation could emerge should disruptions to global supply result in higher global prices for these commodities.
As for the Malaysian economy, BNM said recent data and surveys of business conditions suggest that consumption and investment activity remains resilient.
"Looking ahead, domestic demand will continue to be the anchor of growth," it said.
BNM said that household spending would continue, underpinned by stable employment conditions and income growth.
Malaysia's strong investment activity, it said, was driven by the domestic-oriented industries, the oil and gas sector and the steady progress in the construction of infrastructure projects.