|COVID–19 NEWS||PAC urges special audit on gov’t expenditure during COVID-19 pandemic | COVID: 1,142,104 children in Malaysia fully vaccinated | COVID-19: Over 1.1 million kids in Malaysia fully vaccinated | MOH does not plan to extend PICKids | COVID : 30.4 pct of children in Malaysia fully vaccinated ||
By Zairina Zainudin
KUALA LUMPUR, Jan 20 -- Bank Negara Malaysia’s (BNM) decision to maintain its overnight policy rate (OPR) at 1.75 per cent in its first Monetary Policy Committee (MPC) meeting of 2022 is not a surprise move and very much a neutral-to-positive assessment based on today’s communique.
Bank Islam Malaysia Bhd (BIMB) chief economist Mohd Afzanizam Abdul Rashid said judging from the statement, the central bank appeared to be comfortable with the state of the economy as the reopening of the economy would continue to occur amid the effective vaccination rollout.
“Having said that, the BNM continues to put caveat in their assessment by saying the downside risks remain clearly visible and policy decision will hinge upon the incoming data.
“Catalysts for higher inflation would be from supply disruption and improving demand condition but the resource slack in the economy, in particular the labour market, would put a lid on the inflationary pressures,” he told Bernama.
Earlier, BNM announced that the MPC decided to retain the OPR at status quo on the view that the global economy continues to recover, supported by manufacturing and trade activity.
It said the committee considered the current stance of monetary policy to be appropriate and accommodative.
The key interest rate has been kept at 1.75 since July 2020, the lowest on record since 2004.
Mohd Afzanizam said BIMB has maintained its call that the OPR would be raised by 25 basis points in the second half of this year.
Similarly, MIDF Amanah Investment Bank Bhd said the current focus of BNM’s monetary policy setting is to ensure a sustainable recovery of Malaysia’s economy, especially coming out from the long containment measures imposed last year.
With the rate of inflation hovering within BNM’s forecast, the research firm opined that there is less pressure for the central bank to quickly shift towards policy tightening.
“At this point, we expect the policy normalisation will likely be carried out in the second half of 2022.
"However, the decision will be subject to the stability of economic growth, the pace of price increases and further improvement in macroeconomic conditions, particularly a continued recovery in the labour market and growing domestic demand,” it said in a note.
MIDF said from a medium-term perspective, the policy rate normalisation is needed to avert risks that could destabilise the future economic outlook such as the persistently high inflation and a further rise in household indebtedness.
The next MPC meeting is scheduled for March 3, 2022.
Bernama is the trusted source of reliable real-time comprehensive and accurate news for both the public and media practitioners. Our news is published at www.bernama.com ; BERNAMA TV on: Astro Channel 502, unifi TV Channel 631, MYTV Channel 121 IFLIX; and Bernama Radio broadcasting locally on FM93.9 in Klang Valley, Johor (FM107.5), Kota Kinabalu (FM107.9) and Kuching (FM100.9).
Follow us on social media :
Facebook : @bernamaofficial, @bernamatv, @bernamaradio
Twitter : @bernama.com, @BernamaTV, @bernamaradio
Instagram : @bernamaofficial, @bernamatvofficial, @bernamaradioofficial
TikTok : @bernamaofficial