Bank Negara leaves OPR unchanged

Bank Negara leaves OPR unchanged
By Kevin Tan


Bank Negara's Monetary Policy Committee (MPC) has left the Overnight Policy Rate (OPR) unchanged at 3.5% as its assessment of overall economic outlook indicated that the underlying trend had not changed since April.

Bank Negara said on May 22 that Malaysia was not insulated from inflationary forces felt globally.

“However, at this stage, limited evidence of second round effects and the lack of demand pressures imply that the monetary response can take a pause at this stage,” it said.

On April 25, it raised the OPR by 25 basis points to 3.50%, the third since November 2005.

The central bank said the Malaysian economy was expected to maintain its momentum on the basis of favourable domestic and external conditions.

"Monetary policy will continue to be vigilant to inflationary risks and would respond to any risk of inflation becoming a threat to the medium and longer-term prospects of the economy," the central bank said.

Meanwhile, Bank Negara's international reserves amounted to RM289.52 billion or equivalent to US$78.63 billion at at May 15. The reserves positions was sufficient to finance 8.2 months of retained imports and was 6.6 times the short-term external debt.