KUALA LUMPUR, Jan 24 — Bank Negara Malaysia’s (BNM) decision to retain the Overnight Policy Rate (OPR) at 3.25 per cent was within market expectation, say economists who described the move as accommodative to growth.
FXTM research analyst, Lukman Otunuga said Malaysia’s growth trajectory for 2019 was expected to be steady, albeit, at a more moderate pace.
“The trade tension between United States and China coupled with China’s economic slowdown are key factors that could weigh on Malaysia’s growth prospects.
“Should downside risks to the Malaysian economy become more pronounced, BNM may have enough reasons to adjust the benchmark interest rate to ensure it is an accommodative monetary policy stance,” he said in a note.
In the latest monetary policy statement, the central bank pointed out that risks to growth were tilted to the downside, however, Otunuga said such downside risks could be mitigated by resilient fundamentals of the domestic economy.
Echoing a similar sentiment, RHB Research economist Vincent Loo Yeong Hong said BNM’s decision to leave the OPR unchanged was not a surprise to market players.
“Although there appears to be some room for policy easing, amid a subdued inflationary and slower growth environment, we think the interest rate at this level remains accommodative and would help stem capital outflow and keep the ringgit’s stability,” he added.
In a statement earlier today, BNM, which held its first Monetary Policy Committee (MPC) meeting for the year, announced that the OPR would be maintained at 3.25 per cent, saying that the degree of monetary accommodativeness was consistent with the intended policy stance.
However, it said the MPC would continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation. — Bernama
