Malaysia’s central bank maintained its key rate as widely expected on Tuesday as policymakers said the current stance to be appropriate and accommodative.
The Monetary Policy Committee of Bank Negara Malaysia decided to retain the overnight policy rate at 1.75 percent.
The cumulative reduction of 125 basis points in the key rate so far this year will continue to provide stimulus to the [economy][1]. The bank said it remains committed to utilize its policy levers as appropriate to create enabling conditions for a sustainable economic recovery.
The introduction of targeted measures to contain Covid-19 in several states could affect the momentum of the recovery in the fourth quarter. Nonetheless, growth for the year 2020 is expected to be within the earlier forecasted range.
Supported by the recovery in global demand, turnaround in public and private expenditure, economic activity is projected to improve further in 2021.
The bank cautioned that downside risks to the outlook remain, stemming mainly from ongoing uncertainties surrounding the pandemic globally and domestically.
Headline inflation is forecast to average negative this year due to weak global oil prices. But in 2021 inflation is projected to average higher. Driven by continued spare capacity in the economy, underlying inflation is expected to remain subdued next year.
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