Monetary Policy StatementRef No : 05/12/03 11 May 2012 Embargo : Not for publication or broadcast before 1800 hours on Friday 11 May 2012
While the global economy continues to recover, developments in the most recent period have increased the risks to global growth. Stress in the international financial markets has re-emerged following rising policy uncertainties and renewed concerns over the sovereign debt crisis in the euro area. Economic activity in Europe also continues to be weighed down by the ongoing fiscal consolidation, impaired financial intermediation and weak labour market conditions. In North America, recent economic data have been mixed, indicating uncertainty in the pace of the economic recovery. In Asia, while economic activity continues to be supported by domestic demand, the growth momentum is affected by the slowdown in international trade activity.
While the Malaysian economy is affected by the global developments, domestic demand has continued to support growth, driven by firm consumption and investment activity. Looking ahead, this trend is projected to continue. Private consumption is supported by the stable employment conditions, income growth and public sector measures. Investment activity is mainly led by the domestic-oriented industries, the commodity sector and the public sector.
Headline inflation is expected to moderate in 2012 with improved domestic supply and stable demand conditions. Upside risks to inflation could emerge, particularly from global supply disruptions and result in higher global prices for energy and commodities.
In the MPC’s assessment, there remain continued uncertainties emanating from the global economic and financial environment. The MPC will continue to carefully assess these evolving conditions and their implications on the overall outlook for inflation and growth of the Malaysian economy.
Bank Negara Malaysia
11 May 2012
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