By Central Bank News
The central bank of Malaysia held its benchmark Overnight Policy Rate steady at 3.0 percent, as expected, with the bank saying it considers that rate to be “accommodative and supportive” of the domestic economy which continues to offset the weak global economy.
Bank Negara Malaysia (BNM), which has held its OPR (OPR) unchanged since June 2011, said headline inflation is expected to remain moderate for the rest of the year and while if may increase in 2013, it is expected to remain modest given the economy’s excess capacity.
Malaysia’s annual inflation rate eased to 1.3 percent in September, down from 1.4 percent in August, with global energy and commodity prices expected to be contained given weak global conditions.
“In the Malaysian economy, the sustained expansion in domestic activity has offset the weaknesses in the external sector,” BNM said in a statement, adding that it expects private consumption to be supported by income growth and stable employment. Investment should remain firm, lead by higher capital spending in domestic-oriented sectors, the oil and gas sector and ongoing implementation of infrastructure projects.
Malaysia’s Gross Domestic Product expanded by an annual 5.4 percent in the second quarter, up from 4.9 percent in the first quarter, and it expected to expand by 5 percent this year and between 4.5 and 5.5 percent in 2013.
While the global economy is expected to grow slowly, with uncertainties surrounding the growth prospects and of advanced economies, the central bank said domestic demand in regional Asian economies continues to support growth, despite weak external demand.
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