Monetary Policy Statement - Bank Negara Malaysia
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Monetary Policy Statement
Embargo : Not for publication or broadcast before 1500 on Wednesday, 24 January 2024
24 Jan 2024
At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided
to maintain the Overnight Policy Rate (OPR) at 3.00 percent.
The global economy continues to expand, driven by domestic demand amid strong labour
market conditions. There are further signs of recovery in the electrical and electronics (E&E)
sector, but global trade remains soft partly due to the continued shift in spending from goods
to services, and ongoing trade restrictions. While China’s economy continues to show signs
of improvement, its recovery remains modest given the weakness in the property market.
Global headline and core inflation edged downwards in recent months but continue to be
above average. On the global front, while the monetary policy stance is likely to remain tight
in the near term, the tightening cycle has peaked for most central banks. The growth outlook
remains subject to downside risks, mainly from an escalation of geopolitical tensions,
higher-than-anticipated inflation outturns, and heightened volatility in global financial
markets.
For the Malaysian economy, the fourth quarter advance estimates for GDP affirmed that the
overall growth for 2023 expanded within expectations. Moving forward, growth is expected
to improve in 2024, supported by the recovery in exports and resilient domestic expenditure.
Continued employment and wage growth remain supportive of household spending. Tourist
arrivals and spending are expected to improve further. Investment activity would be
supported by continued progress of multi-year projects in both the private and public
sectors, and implementation of catalytic initiatives under the national master plans. The
growth outlook remains subject to downside risks stemming from weaker-than-expected
external demand and larger declines in commodity production. Meanwhile, upside risks to
growth mainly emanate from greater spillover from the tech upcycle, stronger-than-
expected tourism activity and faster implementation of existing and new projects.
As expected, both headline and core inflation continued to moderate in the fourth quarter,
mainly due to lower cost pressures amid stabilising demand conditions. Overall, both
headline and core inflation for 2023 are within expectations, averaging for the year at 2.5%
and 3.0%, respectively. In 2024, inflation is expected to remain modest, broadly reflecting
stable cost and demand conditions. Risks to the inflation outlook remain highly subject to
changes to domestic policy on subsidies and price controls, as well as global commodity
prices and financial market developments. Of note, the Government’s intention to review
price controls and subsidies in 2024 will affect the outlook for inflation and demand
conditions.
The recent ringgit movements are primarily driven by external factors, and not reflective of
the current domestic economic performance and prospects. As the risk of heightened
volatility in the global financial and foreign exchange markets remains, Bank Negara
Malaysia will continue to ensure sufficient liquidity to support the orderly functioning of the
domestic foreign exchange market. Financial institutions continue to operate with strong
capital and liquidity buffers, with domestic financial conditions remaining conducive to
sustain credit growth.
At the current OPR level, the monetary policy stance remains supportive of the economy and
is consistent with the current assessment of the inflation and growth prospects. The MPC
remains vigilant to ongoing developments to inform the assessment on the outlook of
domestic inflation and growth. The MPC will ensure that the monetary policy stance remains
conducive to sustainable economic growth amid price stability.
See also:
1. Monetary Policy Statement (MPS) Snapshot: January 2024
2. Frequently Asked Questions
Bank Negara Malaysia
24 January 2024
© Bank Negara Malaysia, 2024. All rights reserved.
