BNM maintains OPR at 2.75 per cent

 Bank Negara Malaysia (BNM) has decided to maintain the overnight policy rate (OPR) at 2.75 per cent during its Monetary Policy Committee meeting.

The central bank said the global economic growth has moderated in the third quarter, with a sustained divergence in growth performance of the advanced and emerging economies.

According to BNM, the International financial market conditions have now become more volatile with the increased capital flows to emerging markets. The shift in global liquidity has brought with it risks to macro-economy and financial stability in the emerging market economies.

Meanwhile as for the Malaysian economy, the recent indicators on exports and external-related sectors have affirmed the earlier expectations for growth to moderate in the third quarter. Private consumption would benefit from the favourable employment conditions, firm commodity prices and accommodative financing environment while expansion in private investment was expected to be driven by increased capital spending in the domestic-oriented sectors.

It is believed that the prices are expected to rise at a modest pace in coming months in view of the rising global commodity and food prices, whereas inflation  is expected to remain moderate going into 2011. The central bank said the Monetary Policy Committee considered that the current OPR level as appropriate and consistent with the latest assessment of the economic growth and inflation prospects. “The stance of the monetary policy continues to remain accommodative and supportive of economic growth.

While domestic financial conditions remain orderly, greater vigilance will be accorded to the potential risks arising from large and volatile capital flows.” (Source: Bernama)