Monetary Policy StatementRef No : 18 Sep 2014 Embargo : Not for publication or broadcast before 1800 hours on Thursday 18 September 2014
The global economy continues to expand at a moderate pace. In the advanced economies, while growth performance has been uneven, a number of key economies have continued to show broader signs of improvement. In Asia, growth is supported by the continued expansion in domestic demand and the improved external environment. In this environment, the international financial markets have remained relatively stable.
For Malaysia, economic activity has been supported by the continued growth in domestic demand and exports. Going forward, domestic demand is expected to moderate but remain the key driver of growth. While private investment activity is projected to remain robust, private consumption is expected to moderate. Exports will continue to benefit from the recovery in the advanced economies and from regional demand, although its growth will be slower, partly reflecting the base effect in the second half of 2013. The prospects are for the Malaysian economy to remain on a steady growth path.
Inflation has continued to stabilise as the effects of the price adjustments for utilities and energy have continued to diminish. Inflation is expected to remain relatively stable for the remainder of the year. Going into next year, inflation is projected to edge higher and is expected to be above its long-term average due to domestic cost factors. The absence of external price pressures and more moderate demand conditions are expected to mitigate the impact of these cost factors on the underlying inflation.
The current stance of monetary policy remains supportive of growth. Moving forward, the MPC will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation. The MPC will also continue to assess risks of destabilising financial imbalances. Further adjustment to the degree of monetary accommodation may be taken depending on how new information will affect the assessment on the balance of risks. This is to ensure the sustainability of the growth prospects of the Malaysian economy.
Bank Negara Malaysia
18 Sep 2014
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