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Monetary Policy Statement

Ref No : 04/07/07 27 Apr 2007 Embargo : Not for publication or broadcast before 1900 hours on Friday 27 April 2007

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

Domestic consumption and investment indicators continue to support a steady growth path for domestic demand. More moderate growth in the U.S., however, is expected to lead to some moderation in export growth during the first half of the year, although this is expected to be partially mitigated by sustained growth in other trading partner economies. While this external environment may result in slower growth in the first half of the year, for the year as a whole, the Malaysian economy is expected to experience sustained growth. The growth would be driven mainly by domestic demand, fuelled by private sector consumption and investment, with the public sector playing a strong supportive role.

On the inflation outlook, there continues to be a lack of underlying inflationary pressures in the economy. Consequently, as the effect of the increase in retail petroleum prices lapses, inflation has moderated to 1.5% in March. The expectation going forward is that the average rate of inflation for the year would remain within the forecasted range of 2 - 2.5%.

The current level of the policy rate remains consistent with the medium term outlook of relatively low and stable inflation and sustainable economic growth. The future stance of monetary policy would be determined by Bank Negara Malaysia's assessment of the implications of domestic and external developments on price stability and economic growth.

Bank Negara Malaysia
27 Apr 2007

© Bank Negara Malaysia, 2007. All rights reserved.