Bank Negara Malaysia Holds Overnight Policy Rate 3.00%

The Bank Negara Malaysia kept its Overnight Policy Rate (OPR) steady at 3.00%.  The Bank said: "Headline inflation is expected to moderate in 2012. Nevertheless, upside risks to inflation could emerge arising from the risk of supply disruptions and the possible financialisation in commodity markets, which would result in higher energy and commodity prices. In the MPC's assessment, while global financial conditions have improved, downside risks to the global economy remain. The high global commodity prices continue to pose risks to inflation. The MPC will continue to carefully assess these evolving conditions and their implications on the overall outlook for growth and inflation."

The Bank Negara Malaysia previously kept the rate unchanged at its February meeting, and last increased the OPR by 25 basis points to 3.00% in May last year, it also increased the Statutory Reserve Requirement (SRR) by 100bps to 3.00% at that meeting, and increased the SRR again in July by 100bps to 4.00%.  Malaysia saw inflation of 2.7% in January, down from 3.4% in September, 3.3% in August, 3.4% in July, 3.5% in June, 3.3% in May, 3.2% in April, and 3.0% March.  

The Malaysian economy grew 3.7% in the September quarter, up from 2.8% in the June quarter, compared to -2.8% in the March quarter (+1.5% in Q4 2010), while growing 5.8% on an annual basis compared to 4.3% and 4.9% in the previous quarters (4.8% in Q4 2010).  Malaysia's currency, the Malaysian ringgit (MYR), has gained about 1% against the US dollar over the past year, while the USDMYR exchange rate last traded around 3.01

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