Malaysia's central bank kept its overnight policy rate at 2.75% today, very much in line with the expectations. The global growth momentum has moderated in recent months. In the advanced economies, growth has slowed by more than expected following continued weakness in the labour market and the fading impact of the temporary boost to economic activity provided by the inventory build up and the policy stimulus, noted the bank.
For the regional economies, after registering strong economic expansion in the first half of the year, the slower pace of export growth will have some impact on economic performance. Domestic economic activity, however, remains strong. Given these developments, the assessment going forward is for the global recovery to proceed at a more moderate pace.
The central bank expects inflation to rise at a modest pace in the coming months despite the adjustment in retail fuel prices in July. Domestic inflation edged higher in June and July mainly on account of increases in food and energy prices. Annual consumer price inflation in Malaysia accelerated to 1.9% in July from 1.7% in June.
In the second quarter, the country's economic growth eased from a decade-high recorded in the first three months of the year. Gross domestic product, or GDP, rose 8.9% year-on-year during the April to June period following a 10.1% increase in the first quarter.
The central bank considers the current monetary policy as appropriate and consistent with the latest assessment of the economic growth and inflation prospects. At the current level of the OPR, the stance of monetary policy continues to remain accommodative and supportive of economic growth.