KUALA LUMPUR, Sept. 7 (Xinhua) -- Bank Negara Malaysia (BNM), the country's central bank, left its Overnight Policy Rate (OPR) unchanged at 3 percent Thursday.
"At the current level of the OPR, the stance of monetary policy remains accommodative," BNM said in a statement.
The BNM said it expects the country's economic growth this year stronger than earlier expected, sustained by the more positive global growth outlook and stronger spillovers from the external sector to the domestic economy.
Domestic demand will remain the key driver of growth, supported by improving incomes and overall labor market conditions, new and ongoing infrastructure projects and sustained capital investment by firms in the manufacturing and services sectors, it added.
Malaysia recorded a higher economic growth of 5.8 percent in the second quarter, driven by firmer domestic activity and exports.
While expecting the global growth momentum to sustain, the central bank noted, it may be affected by political and policy developments in major economies and geopolitical risks.
Meanwhile, the BNM projected the headline inflation to moderate on expectation of a smaller effect from global cost factors.
The central bank also said, the ringgit, Malaysia's currency, has strengthened to better reflect the country's economic fundamentals.
The domestic financial markets have been resilient; banking system liquidity remains sufficient with financial institutions continuing to operate with strong capital and liquidity buffers, it said.
Economists said they were not surprised by the BNM's maintaining policy, and expected the central bank continue to do so in this year.
"There is little need for additional monetary policy support. While we expect growth to ease a little over the second half, it is still set to hold up pretty well," Capital Economics said in a report Thursday.
Another reason the research house cited is the impact a change of monetary policy could have on the country's currency.
"Although the ringgit has been fairly stable against the U.S. dollar over the past few months, it remains vulnerable to swing in global risk aversion," it added.
The OCBC Bank also said in a report Thursday, it showed the BNM's reluctance to move rates since its surprise cut in July last year.
"With the healthy growth prints and tame inflation, there is likely little motivation for policy makers to move rates anytime soon," it said.
