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Monetary Policy Statement

Ref No : 10/09/09 28 Oct 2009 Embargo : Not for publication or broadcast before 1800 hours on Wednesday 28 October 2009
At the Monetary Policy Committee (MPC) meeting today, Bank Negara Malaysia decided to leave the Overnight Policy Rate (OPR) unchanged at 2.00 percent.

Since the MPC in August, the international economic and financial conditions have improved further. Economic activity in the advanced economies has shown broader signs of stabilisation, supported by the impact of policy measures implemented and an improvement in consumer sentiment and business confidence. Several regional economies have reported positive growth in the third quarter, indicating that recovery in the region is ongoing. Notwithstanding these improvements, the outlook for the global economy continues to be uncertain, with recovery likely to be slow and uneven in view of the ongoing adjustments.

In the domestic economy, stronger evidence has emerged to suggest that conditions are improving and a recovery in economic activity is gaining some strength. These improvements are more broad-based and are reflected in stronger labour market conditions, consumer and business sentiments, industrial production, financing activity and external trade. These positive developments are expected to continue into 2010, with growth in the domestic economy expected to continue to be supported by existing policy measures and the growing confidence in the private sector.

Consumer prices declined at a slower rate in September. The decline in prices largely reflects the cumulative fall in fuel prices since June 2008 and the easing pressure on food prices. The decline in consumer prices, however, is expected to be temporary. Excluding further unanticipated price adjustments and external influences, inflation in 2010 is projected to be positive but remain subdued.

With improving domestic economic conditions, and as price pressures and inflationary expectations are expected to remain contained going forward, the assessment is that the current monetary policy stance is appropriate and will continue to provide support to economic activity.

Bank Negara Malaysia
28 Oct 2009

© Bank Negara Malaysia, 2009. All rights reserved.