RHB | Malaysia | Bank Negara Held OPR Unchanged, Downside Risks To Growth Remain High

Economic Research	06 November 2015
Malaysia
Economic Highlights
Bank Negara Held OPR Unchanged, Downside Risks To Growth Remain High Bank Negara Malaysia's (BNM) Monetary Policy Committee (MPC) decided to keep the Overnight Policy Rate (OPR) unchanged at 3.25% for the eighth consecutive meeting on 5 November (see Figure 1), which came within the market and our expectations. The Central Bank views that the Malaysian economy continues to be affected by the weak external environment. Although domestic demand remains the main driver of growth, private consumption is, however, expected to moderate as households continue adjusting to the higher cost of living amidst an uncertain economic environment. Household spending will nevertheless be supported by wage growth and stable labour market conditions. Despite the slowing investment activity in the oil and gas industry, investment is being supported by infrastructure development projects and capital spending by the manufacturing and services sectors. Looking ahead, the Malaysian economy will continue to benefit from having diversified sources of growth, economic flexibility, low unemployment, manageable level of external debt and a well-capitalised banking system. The prospects are for the economy to expand within the region of 4.5%-5.5% this year and 4.0%-5.0% in 2016. However, the Central Bank still recognised that the downside risks to growth remain high. Economist:  Peck Boon Soon  | +603 9280 2163 Economist:  Vincent Loo Yeong Hong  | +603 9280 2172
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