OPR unchanged at 1.75 per cent

BNM says it remains committed to utilise its policy levers as appropriate to create enabling conditions for a sustainable economic recovery.

KUCHING: At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 1.75 per cent.

BNM in a statement said the expedited roll-out of mass vaccination programmes, together with ongoing policy support, are expected to lift global growth prospects going forward.

“The MPC considers the stance of monetary policy to be appropriate and accommodative. Given the uncertainties surrounding the pandemic, the stance of monetary policy going forward will be determined by new data and information, and their implications on the overall outlook for inflation and domestic growth,” it said in the statement.

“The bank remains committed to utilise its policy levers as appropriate to create enabling conditions for a sustainable economic recovery.”

The central bank said Malaysia’s financial conditions also remain supportive, with the overall outlook remaining subject to downside risks, primarily if there is further resurgence of Covid-19 infections and delays in mass inoculation against Covid-19.

For Malaysia, BNM saw that the resurgence in Covid-19 cases and the introduction of targeted containment measures has affected the recovery momentum in the fourth quarter of 2020.

As a result, growth for 2020 is expected to be near the lower end of the earlier forecasted range.

“For 2021, while near-term growth will be affected by the re-introduction of stricter containment measures, the impact will be less severe than that experienced in 2020. The growth trajectory is projected to improve from the second quarter onwards,” it continued.

“The improvement will be driven by the recovery in global demand, turnaround in public and private sector expenditure amid continued support from policy measures, and higher production from existing and new manufacturing and mining facilities,” it said.

BNM added that the roll-out of vaccines in the coming months will also lift sentiments.

“Downside risks to the outlook remain, stemming mainly from ongoing uncertainties surrounding the dynamics of the pandemic and potential challenges that might affect the roll-out of vaccines both globally and domestically.”

In line with earlier assessments, BNM expected average headline inflation to be negative in 2020 due mainly to the substantially lower global oil prices.

“For 2021, headline inflation is projected to average higher, primarily due to higher global oil prices. Underlying inflation is expected to remain subdued amid continued spare capacity in the economy. The outlook, however, is subject to global oil and commodity price developments.”

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