KUALA LUMPUR, March 2 Following is the full text
of the policy statement from Malaysia's central bank, which held
its key interest rate at 3.00 percent at its monetary policy
committee meeting on Thursday.
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At its meeting today, the Monetary Policy Committee (MPC) of
Bank Negara Malaysia decided to maintain the Overnight Policy
Rate (OPR) at 3.00 percent.
Economic activity in the advanced and emerging economies has
continued to improve. Global trade is also showing a recovery.
In this environment, the Asian economies are benefiting from
stronger external demand amid sustained domestic activity. For
2017, the global economy is projected to expand at a slightly
faster pace. Nevertheless, there remain risks to global growth
arising from threats such as protectionism, geopolitical
developments, heightened volatility of financial markets and
negative developments in the prices of key commodities.
Despite the challenging global and domestic environment, the
Malaysian economy expanded by 4.2% in 2016. Growth was
underpinned by private sector activity, with additional support
from the turnaround in net exports. The growth momentum is
expected to be sustained in 2017. With the growth of domestic
demand being sustained, the more positive contribution from the
external sector will lead to a better performance of the
Headline inflation is projected to be higher in 2017, reflecting
primarily the pass-through impact of the increase in global oil
prices on domestic retail fuel prices. Headline inflation would
remain relatively high in the first half of the year before
moderating thereafter. However, the projected trajectory of
domestic headline inflation will be dependent on the future
trend in global oil prices which remains highly uncertain. The
cost-driven inflation is not expected to have a significant
impact on the broader price trends given the stable domestic
demand conditions. Core inflation is expected to increase
The ringgit, along with other emerging market currencies, has
continued to stabilise. The implementation of financial market
development measures has had a positive impact on the domestic
financial markets. Banking system liquidity remains sufficient.
Financial institutions continue to operate with strong capital
and liquidity buffers and the growth of financing to the private
sector is consistent with the pace of economic activity.
At the current level of the OPR, the stance of monetary policy
is accommodative and supportive of economic activity. The MPC
will continue to assess the balance of risks surrounding the
outlook for domestic growth and inflation.
Bank Negara Malaysia
2 March 2017
(Reporting by Joseph Sipalan)