KUALA LUMPUR: The recent overnight policy rate (OPR) cut will provide an additional lift to domestic growth amid moderate inflation prospects, Bank Negara Malaysia governor Datuk Seri Abdul Rasheed Ghaffour said.
He said the central bank continues to monitor the impact of the reduction, noting improved clarity in the external environment since the OPR was lowered to 2.75 per cent in July, particularly regarding tariff negotiations.
“At the July meeting, we assessed that while Malaysia’s economy remained resilient, external uncertainties could affect domestic economic prospects,” he told a media briefing on Malaysia’s second-quarter (Q2) growth.
“With inflation expected to stay moderate, the OPR was reduced to 2.75 per cent as a pre-emptive measure to buffer our economy against these uncertainties and, importantly, to preserve Malaysia’s steady growth path.”
While uncertainties over sectoral tariffs linger, Abdul Rasheed said the economy “remains on a strong footing.” He added the Monetary Policy Committee will stay vigilant to developments and assess the balance of risks to domestic growth and inflation.
On the ringgit, he said favourable economic prospects and structural reforms will provide medium-term support to the local note, with Bank Negara ensuring orderly foreign exchange market operations.
He also pointed to coordinated efforts with corporates and investors to encourage more consistent repatriation and conversion of foreign earnings.
“In Q2, the ringgit appreciated by 1.5 per cent on a nominal effective exchange rate basis, against the currencies of Malaysia’s major trading partners. It also strengthened by 5.1 per cent against the US dollar amid a broad-based weakening of the greenback.
“This reflects investors’ concerns on United States economic prospects in light of US trade and fiscal policy developments,” he said.
On investments, Abdul Rasheed said both private and public sector investments remain strong despite global uncertainties, with growth supported by continued expansion in investment activity.
“Forward-looking indicators from the latest investment approvals by Malaysian Investment Development Authority point towards sustained investment momentum, underpinned by a healthy pipeline of planned investments despite rising global uncertainties.
“Furthermore, the continued implementation of multi-year public projects and high realisation of approved private investments will also help cushion the impact from external shocks, making the investment landscape more resilient,” he said.
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