KUALA LUMPUR: Bank Negara Malaysia (BNM) has maintained the overnight policy rate (OPR) at 3.0 per cent.
"At the current OPR level, the monetary policy stance remains supportive of the economy and is consistent with the current assessment of inflation and growth prospects," the central bank said in a statement.
The Monetary Policy Committee (MPC) last hiked the interest rate by 25 basis points in May last year. The committee has had eight meetings since then.
BNM highlighted that the global economy is continuing to expand, supported by resilient labour markets and a steady recovery in global trade.
Looking forward, it anticipates global growth to be sustained by robust labour market conditions, easing inflation, and less restrictive monetary policies.
The ongoing recovery in global trade is expected to be bolstered by both electrical and electronics (E&E) and non-E&E products, BNM said.
"The growth outlook remains subject to downside risks, mainly from further escalation of geopolitical tensions, volatility in global financial markets, and slower growth momentum in major economies."
BNM said that exports are expected to be further lifted by the global tech upcycle given Malaysia's position in the semiconductor supply chain, as well as continued strength in non-electrical and electronics goods.
"Tourist spending is expected to continue to increase. Employment and wage growth, as well as policy measures, remain supportive of household spending," it said.
BNM said that multi-year projects in both the private and public sectors, the implementation of catalytic initiatives under the national master plans, as well as the higher realisation of approved investments will sustain the robust expansion in investment activity.
However, it noted that the growth outlook is subject to downside risks from lower-than-expected external demand and commodity production.
"Upside risks to growth mainly emanate from greater spillover from the tech upcycle, more robust tourism activity, and faster implementation of investment projects," it said
Both headline and core inflation averaged 1.8 per cent in the first half of 2024. The spillovers from the diesel price adjustment to broader prices have been contained, given effective mitigation and enforcement measures to minimise the cost impact on businesses.
Average headline and core inflation are expected to remain within the earlier projected ranges and are unlikely to exceed 3.0 per cent this year.
"Nevertheless, the inflation outlook remains highly subject to the implementation of further domestic policy measures. Upside risk to inflation would be dependent on the extent of spillover effects of domestic policy measures on subsidies and price controls to broader price trends, as well as global commodity prices and financial market developments," it said.
On the ringgit, the central bank said positive economic prospects and domestic structural reforms, coupled with ongoing initiatives to encourage flows, will continue to provide support to the local currency.
"The MPC remains vigilant to ongoing developments to inform the assessment on the domestic inflation and growth trajectories going into 2025.
"The MPC will ensure that the monetary policy stance remains conducive to sustainable economic growth amid price stability," it added.