Economic Highlights - Bank Negara Raised Its Key Policy Rate By 25 - 9/7/2010

Bank Negara Malaysia’s (BNM) Monetary Policy Committee (MPC) raised the Overnight Policy Rate (OPR) by another 25 basis points to 2.75% on 8 July. This was the third increase in a row for this year, in a move to prevent financial imbalances from building up and given that the economy has turned around since the 4Q of last year. Indeed, the Central Bank indicated that economic activities remained robust in the 2Q, as reflected in recent trends in industrial production, financing activity, labour market conditions and exports. Following the hike, the MPC considers “the new level of the OPR to be appropriate and consistent with the current assessment of the growth and inflation prospects”. The remark suggests that the Central Bank is likely to have done with its rate hike this year. Furthermore, the Central Bank is of the view that there is increased risk that the global growth momentum could moderate even though the recovery will continue. This is on account of rising volatility in the international financial markets, following concerns over the ongoing sovereign debt crisis in several advanced economies.

Economic Highlights - Bank Negara Raised Its Key Policy Rate By 25 - 9/7/2010