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Malaysia's central bank keeps overnight interest rate unchanged at 3%
By Jennifer Chiou
New York, Sept. 5 - The Monetary Policy Committee of Bank Negara Malaysia, Malaysia's central bank, announced that it has maintained its overnight policy rate unchanged at 3% as the global economy continues to experience modest growth.
The committee said that the strength of the recovery in the major advanced economies has yet to gain momentum. It noted that while domestic demand continues to support growth in emerging market economies, the growth momentum has moderated.
According to a committee release, the reversal of capital flows from the emerging economies following a prolonged period of strong inflows has resulted in the depreciation of emerging market currencies.
In the Malaysian economy, domestic demand has continued to support growth amid the weaknesses in external demand, the release said. Going forward, economic growth is expected to be underpinned by the continued expansion in domestic activity.
Domestic investment activity, which has been robust, will continue to be led by capital spending in the domestic-oriented industries and the ongoing implementation of infrastructure projects, the committee stated.
Overall growth prospects, however, could be affected by risks in the global economy and international financial markets.
Inflation remained low at 1.7% in the first seven months of the year. Going forward, inflation is expected to increase in the remainder of the year and into 2014 resulting from domestic cost factors, including subsidy adjustments, the release said.
The increase in inflation, however, is from a low level and will be mitigated by a stable external price environment, expansion in domestic capacity and moderate domestic demand pressures, the release added.
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