Status-quo in OPR with a backdrop of global economic expansion

In its third Monetary Policy Committee meeting of 2024, Bank Negara Malaysia (BNM) has opted to keep the Overnight Policy Rate (OPR) unchanged at 3.00%, in line with market expectations and predictions.

The decision comes amidst a backdrop of a projected global economic expansion, driven by resilient labor markets, moderating inflation, and a recovery in global trade, as outlined in the recent Monetary Policy Statement (MPS).

Despite facing headwinds from tight monetary policies and reduced fiscal support, the MPS anticipates sustained global growth.

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OPR and the Economy

In the domestic front, Malaysia’s economy saw an uptick in activity during the first quarter of 2024, attributed to resilient domestic expenditure and a rebound in exports. Investments are bolstered by ongoing long-term projects and national strategic initiatives, while steady employment and wage growth support robust household spending.

Looking ahead, BNM foresees a stable OPR throughout 2024, with a focus on sustaining growth momentum in the Malaysian economy. While external trade is expected to recover, geopolitical tensions and potential slower global growth pose challenges. Nevertheless, the domestic economic outlook remains vigilant and resilient, supported by steady domestic demand.

However, the stabilisation of core inflation and the challenging external environment may influence BNM to maintain the OPR at its current level throughout the year.