RHB | Malaysia | The OPR Was Left Unchanged At 3.25%

Economic Research	05 March 2015
Malaysia
Economic Highlights
The OPR Was Left Unchanged At 3.25% Bank Negara Malaysia's (BNM) Monetary Policy Committee (MPC) decided to keep the Overnight Policy Rate (OPR) unchanged at 3.25% for the fourth consecutive meeting on 5 March (see Figure 1). This suggests that the Central Bank remains wary on the downside risks of the global economy. Indeed, it said that the downside risks to the global economic outlook remain given the weak growth momentum in a number of major economies. The uncertainties in the policy environment are also contributing to the shift in sentiments in the international financial markets, according to the Central Bank. There is no strong reason for the Central Bank to cut interest rates at this juncture, as it expects domestic demand to hold up relatively well. While the introduction of the Goods and Services Tax and the lower earnings in the commodity sector are expected to have some impact on private consumption, household spending will continue to be supported by the steady increase in income and employment. Additionally, the lower fuel prices are contributing to higher disposable income, said BNM. Investment activity is also expected to remain resilient, with broad-based capital spending by both the private and public sectors, thus cushioning the lower investment in the oil and gas sector. While export growth will be affected by the lower commodity prices, the performance of manufactured exports is expected to improve. The prospects are for the Malaysian economy to still remain on a steady growth path. Economist:  Peck Boon Soon  | +603 9280 2163