BANK Negara Malaysia (BNM) has maintained its Overnight Policy Rate (OPR) at 1.75%, after its Monetary Policy Committee (MPC) meeting today.

The central bank said the previous four rate cuts this year, which saw the OPR reduced by 125 points, will continue to provide stimulus to the economy.

“Given the outlook for growth and inflation, the MPC considers the stance of monetary policy to be appropriate and accommodative,” BNM said in a statement.

The outlook will still be subjected to downside risks, particularly from ongoing uncertainties surrounding the course of the pandemic domestically and globally.

For Malaysia, economic activity continues to recover from the trough in April this year.

“Latest high frequency indicators show that labour market conditions, household spending and trade activity have continued to improve,” it added.

BNM added that the fiscal stimulus packages have also supported economic recovery alongside monetary and financial measures.

“Looking ahead, the improvement is expected to continue into 2021, supported by the recovery in external demand and expansion in private sector expenditure,” the central bank said.

However, it added the pace of recovery across sectors is expected to be uneven, with economic activity in some industries remaining below pre-pandemic levels, and slower improvement in the labour market.

On the global front, BNM said the global economy continues to improve with the easing of containment measures across economies and strong policy support.

Re-opening of production facilities has also led to a resumption of manufacturing and trade activity, it said.

However, the recovery in the services sector has been slower. Financial conditions have improved, although risk aversion remains elevated, it added.

“The outlook is still subject to downside risks and uncertainty, primarily due to the risk of a resurgence of the pandemic and weaker labour market conditions,” it said.

The bank also said it remained committed to utilise its policy levers as appropriate to create enabling conditions for a sustainable economic recovery. – September 10, 2020.