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Monetary Policy Statement

Ref No : 03/12/03 09 Mar 2012 Embargo : Not for publication or broadcast before 1800 hours on Friday 09 March 2012

At the Monetary Policy Committee (MPC) meeting today, Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 3.00 percent.

The global economic and financial conditions registered some improvements since the previous MPC meeting. Stress in the international financial markets has been partially alleviated by the introduction of measures to address the European sovereign debt crisis. In North America, there have been tentative signs of improvements in the economy. Notwithstanding these improvements, growth in the advanced economies remains subdued. In Asia, while growth continues to be supported by domestic demand, the growth momentum has moderated amid a slowdown in trade activity.

In the domestic economy, latest indicators and surveys of businesses point to continued expansion in private consumption and business spending. Going forward, domestic demand will continue to drive the expansion of the Malaysian economy. Private consumption will be supported by stable employment conditions, income growth and public sector measures. Investment activity will be supported by the domestic-oriented industries, the commodity sector and the public sector.  However, the overall growth momentum in 2012 is expected to moderate largely due to the weaker external environment.

Headline inflation is expected to moderate in 2012. Nevertheless, upside risks to inflation could emerge arising from the risk of supply disruptions and the possible financialisation in commodity markets, which would result in higher energy and commodity prices.

In the MPC’s assessment, while global financial conditions have improved, downside risks to the global economy remain. The high global commodity prices continue to pose risks to inflation. The MPC will continue to carefully assess these evolving conditions and their implications on the overall outlook for growth and inflation.

Schedule of MPC Meetings

Due to the revised schedule of international meetings, the May MPC meeting will now be held on Friday, 11 May 2012 instead of the earlier date, Thursday, 3 May 2012.

Bank Negara Malaysia
09 Mar 2012

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