Bank Negara Malaysia (BNM) has announced its decision to maintain the Overnight Policy Rate (OPR) at 3%. This move comes amidst challenges in Malaysia’s economic growth, including slower external demand and a decline in commodity production.
The decision marks the third consecutive time that the OPR has remained at 3%. In May, BNM raised the OPR by 25 basis points from 2.75% to 3%. The central bank stated that the current OPR level of 3% continues to support the economy and is in line with inflation and growth prospects.
BNM’s Monetary Policy Committee (MPC) remains vigilant to ongoing developments that inform the outlook for domestic inflation and growth. The committee is committed to ensuring that the monetary policy stance remains conducive to sustainable economic growth with price stability.
BNM noted that robust domestic demand, strong labor market conditions, increased tourist arrivals and spending, and investment activity supported by infrastructure projects will drive the economy’s growth momentum in the coming year. However, the growth outlook faces risks from weaker external demand and commodity production declines, countered by potential upsides from tourism activity and E&E sector recovery.
Regarding inflation, BNM highlighted that both headline and core inflation continue to ease in line with expectations. This trend is expected to continue in the second half of 2023 due to moderating price increases. The inflation outlook remains subject to domestic policies, global commodity prices, financial market developments, and the persistence of core inflation.