Friday, November 9, 2012

Monetary Policy Update: OPR Maintained At 3%

No surprises from yesterday’s announcement, and the press release for the announcement was probably the briefest this year in terms of describing economic conditions (excerpt):

Monetary Policy Statement

At the Monetary Policy Committee (MPC) meeting today, Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 3.00 percent.

The global economy is expected to continue to experience slow growth…

…In the Malaysian economy, the sustained expansion in domestic activity has offset the weaknesses in the external sector. Looking ahead, private consumption will be supported by the income growth and stable employment conditions. Investment is expected to remain firm, led by increased capital spending in the domestic-oriented sectors, the oil and gas sector and the on-going implementation of infrastructure projects.

Headline inflation is expected to remain moderate for the remainder of 2012. While inflation may increase in 2013, it is expected to remain modest given the excess capacity in the economy…

There’s not much that can be added to that, though it does suggest somewhat that the MPC is looking at growth being sustained at current levels over the near term, which I interpret to mean in the 4.5%-5.5% region which is about where Malaysia’s medium term potential output path is.

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