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Monetary Policy Statement

Ref No : 11/11/04 11 Nov 2011 Embargo : Not for publication or broadcast before 1800 hours on Friday 11 November 2011

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

Latest indicators suggest that the global growth momentum has moderated in recent months. Economic activity in the advanced economies is being weighed down by heightened market volatility and lower confidence, amid rising policy uncertainties. Labour market conditions in several of these economies also continue to be weak. Going forward, these conditions may persist as critical policy issues remain unresolved and pose further downside risks to global growth. In the Asian region, sustained domestic demand is projected to continue to support economic growth. Nevertheless, greater weakness in the external environment is expected to affect regional growth prospects.

The domestic economy improved in the third quarter, due primarily to stronger domestic demand. Export performance also improved, reflecting firm regional demand and the normalisation of trade flows from supply chain disruptions. Looking ahead, the weaker external environment could, however, impact the overall growth prospects. Domestic demand will continue to be the anchor of growth, supported by private consumption and investment and reinforced by public sector spending and investment activity. Employment conditions are also expected to remain stable.

Domestic headline inflation was 3.4% in September on account of the slower increase in the transport category. Going forward, inflation is expected to remain stable for the rest of the year and moderate in 2012. Global energy prices are expected to experience some moderation while the impact of domestic demand factors on inflation is also expected to remain contained. High food price inflation, largely due to supply disruptions, continues to remain a concern.

In the MPC's assessment, the global economic outlook is expected to be weaker and international financial market conditions will remain highly uncertain and volatile going forward. While the domestic economy is expected to expand, these external developments could affect the overall growth prospects of the Malaysian economy. The MPC will continue to monitor these developments and assess the risks to the outlook for domestic growth and inflation.

The meeting also approved the schedule of MPC meetings for 2012. In accordance with the Central Bank of Malaysia Act 2009, the MPC will convene six times a year. The Monetary Policy Statement will be released at 6 p.m. on the same day as the MPC meeting.

Schedule of Monetary Policy Committee
Meetings for 2012

MPC Meeting No.

Dates

1st

31 January 2012 (Tuesday)

2nd

9 March 2012 (Friday)

3rd

3 May 2012 (Thursday)

4th

5 July 2012 (Thursday)

5th

6 September 2012 (Thursday)

6th

8 November 2012 (Thursday)

Bank Negara Malaysia
11 Nov 2011

© Bank Negara Malaysia, 2011. All rights reserved.