KUALA LUMPUR, May 8 (Xinhua) -- The Malaysian central bank has decided to maintain the Overnight Policy Rate at 3 percent.
The central bank said in a statement on Thursday that at the current level, the monetary policy stance is consistent with the current assessment of inflation and growth prospects.
Recognizing that there are downside risks in the economic environment, the bank remains vigilant to the ongoing developments, and will ensure that the monetary policy stance remains conducive to sustainable economic growth amid price stability, the statement said.
According to the bank, tariff measures announced by the U.S. and retaliations have weakened the outlook for global growth and trade.
"This outlook remains subject to considerable uncertainties, which include outcomes of trade negotiations and geopolitical tensions. Such uncertainties could also lead to greater volatility in the global financial markets," it said.
The bank said the balance of risks to Malaysia's growth outlook is tilted to the downside, stemming mainly from a deeper economic slowdown in major trading partners, weaker sentiment amid higher uncertainties affecting spending and investments, as well as lower-than-expected commodity production.
Meanwhile, favorable trade negotiation outcomes and pro-growth policies in major economies, as well as more robust tourism activity, could raise Malaysia's growth prospects.
"Moving forward, the escalation in trade tensions and heightened global policy uncertainties will weigh on the external sector. The continued demand for electrical and electronic goods and higher tourist spending, however, will provide some cushion to exports," said the bank.
It expects Malaysia's growth to be anchored by resilient domestic demand. Employment and wage growth, particularly within domestic-oriented sectors, as well as income-related policy measures, will support household spending. ■