Despite rising prices, the Central Bank has finally decided to keep the Overnight Policy Rate unchanged.
In the next twelve months, while both the risks to higher inflation and the risks to slower growth have increased, the immediate concern is to avoid a fundamental economic slowdown that would involve higher unemployment. Slowing growth itself will contribute to containing the potential for second round effects on inflation, thereby containing further increases in prices in the second-half of 2009. Given the underlying fundamental strength of the economy, and the resilient banking sector, the Bank’s assessment is that after this transitional period, the Malaysian economy has the potential to reestablish its medium term growth path.
The Monetary Policy Committee has decided to keep the Overnight Policy Rate unchanged at 3.50%.
Source: www.bnm.gov.my
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