KUALA LUMPUR, May 12 — There were no signs of tightening in the economy, Bank Negara Malaysia Governor Tan Sri Nor Shamsiah Mohd Yunus said in justifying the central bank’s decision to recalibrate the country’s monetary policy,
She said the decision was made as the economy has continued to strengthen.
“After four overnight policy rate (OPR) adjustments in 2022, we decided to pause at our January and March MPC (monetary policy committee) meeting this year to take stock of the impact from the adjustments.
“Now, the latest data shows that there are no signs of overt tightening in the economy.
“With that, and amid resilient domestic growth prospects, the MPC judged that it was the right time to further normalise the degree of monetary accommodation,” Nor Shamsiah said during a press conference today.
With this decision, she said the MPC has withdrawn the monetary stimulus intended to address the Covid-19 crisis in promoting economic recovery.
“At the current OPR level of 3 per cent, the monetary policy stance is slightly accommodative and remains supportive of the economy.
“The MPC will continue to ensure that the monetary policy stance is consistent with the outlook of domestic inflation,” she said.
“I know that there has been a lot of interest in the recent monetary policy adjustment, so let me take a moment to explain further on why we increased the OPR at our recent MPC meeting.
“Firstly, I want to make it clear that our economy continues to strengthen.
“GDP (gross domestic product) has already exceeded pre-pandemic levels. Unemployment has also fallen, and households remains resilient.
“And as I mentioned after the four consecutive OPR adjustments of 2022, we did not see any signs of excessive tightening for example in consumption or in investment.
“We recall that we have been on a normalisation path since last year, so taking all of these together, we judge that it was the right time to recalibrate our monetary policy in line with a stronger economy.”
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