Bank Negara Malaysia’s Monetary Policy Unchanged

September 11, 2015

Malaysia’s overnight money rate target has been at 3.25% for the past 14 months following four 25-basis point hikes between March 2010 and May 2011 and a fifth 25-bp increase engineered some three years later in July 2014.  The latest policy meeting concluded with the release of a statement that express satisfaction with the baseline outlook for growth and inflation.  Ringgit depreciation is observed not to be impairing the real economy or domestic financial market functionality.

The assessment is therefore for the economic growth to remain within the region of 4.5 to 5.5 percent…. Headline inflation is expected to peak in early 2016 and it will moderate for the remainder of the year….   Overall domestic liquidity conditions remain stable. The financial system remains sound, with healthy growth in financing. Financial intermediation has therefore continued to support the economy….  The ringgit exchange rate will reflect the underlying fundamentals of the economy when the external and domestic uncertainties recede.

Officials consider policy appropriately accommodative.  There is a hint that policy could be eased if risks risks in the global economic and financial environmen take a turn for the worse:  “These risks are being carefully monitored to assess their implications on macroeconomic stability and the prospects of the Malaysian economy. This is to ensure that the monetary policy stance is consistent with the sustainability of the overall growth prospects.”

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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