At the last Monetary Policy Committee (MPC) meeting of the year, Bank Negara Malaysia (BNM) decided to maintain the Overnight Policy Rate (OPR) at 3.00%.
Despite the weakening ringgit, BNM assures that the risk to financial system is contained.
BNM says the current OPR level will ensure the economy stays on the steady growth path.
“The risk of destabilising financial imbalances has been contained. However, the MPC will be monitoring these risks to ensure the sustainability of the overall growth prospects,” BNM said in a statement released yesterday.
With the low global energy and commodity prices, inflation is also expected to remain at stable levels in 2017. Headline inflation in 2016 will be at the lower end of 2% to 2.5% this year.
On the weakening ringgit, the central bank said the sharp adjustments are due to continuing uncertainties in global economic and policy environment and geopolitical developments. It also warned of uncertainties arising from protectionism and financial market volatility.
“BNM will continue to provide liquidity to ensure orderly functioning of the domestic foreign exchange market.”
According to a report by The Star, research houses opined that BNM had no option but to leave the rates unchanged due to the current volatility and sluggish economic environment.
The next MPC meeting will be held on January 18-19 next year.