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Monetary Policy Statement

Ref No : 02/08/05 25 Feb 2008 Embargo : Not for publication or broadcast before 1800 hours on Monday 25 February 2008

At the Monetary Policy Committee meeting today, Bank Negara Malaysia decided to leave the Overnight Policy Rate (OPR) unchanged at 3.50 percent.

The latest indicators show strong domestic demand will provide the support for the Malaysian economy to perform well in the coming months. The demand for financing by businesses and consumers remains strong, with robust investment activity as corporations expand capacity, and steady consumption growth also being supported by a stable employment environment and growth in incomes. The risks to the Malaysian economy are primarily from the external sector. The heightened downside risks to global growth have been affirmed by the latest data released by the large industrial countries.

Commodity and food prices have continued their upward trend, and this is contributing to higher global inflation. Consequently, the impact of these developments on inflation in Malaysia is expected to be felt in the first half of 2008. However, as global growth slows, this would be expected to ease some of the inflationary pressures.

Overall, there continues to be a high degree of uncertainty regarding the macroeconomic environment over the policy horizon. The current assessment of the balance of risks to the growth and inflation prospects does not prompt a change to the present stance of monetary policy, which remains supportive of growth.

Bank Negara Malaysia
25 Feb 2008

© Bank Negara Malaysia, 2008. All rights reserved.