Statement by the Bank Negara Malaysia:
The global economy continues to experience slow growth. In the advanced economies, growth has remained weak. While domestic demand in the emerging economies remains an important source of growth, the prolonged weakness in the external environment has begun to affect domestic economic activity in these economies. Although global monetary conditions remain highly accommodative, financial market volatility has increased substantially in the recent period as markets reassessed the direction of policy.
For the Malaysian economy, domestic demand has continued to support growth amid the continued moderation in external demand. The sustained weakness in the external sector may, however, affect the overall growth momentum. Going forward, private consumption is expected to remain steady underpinned by income growth and stable labour market conditions. Capital spending in the domestic-oriented industries and the ongoing implementation of infrastructure projects will also support investment activity.
Inflation remained low at 1.6% in the first five months of the year. While inflation is expected to rise in the second half of the year due to domestic supply and cost factors, it is projected to remain modest. Pressures from global commodity prices are also likely to be contained given the moderate global growth prospects.
The MPC considers the current stance of monetary policy to be appropriate given the outlook for inflation and growth. In addition to domestic conditions, the MPC will continue to carefully assess the global economic and financial developments and their implications on the overall outlook for inflation and growth of the Malaysian economy.