At the Monetary Policy Committee (MPC) meeting today, Bank Negara Malaysia decided to leave the Overnight Policy Rate (OPR) unchanged at 2.00 percent.

The latest indicators have continued to signal further improvements in the international economic and financial conditions. Economic activity in the advanced economies has shown broader signs of recovery, supported by the impact of the policy measures, while several regional economies have recorded positive growth in the third quarter. While these positive developments are expected to continue going into 2010, the recovery is likely to be gradual and uneven, with the outlook remaining uncertain once the effects of the policy support begin to diminish. 

In the domestic economy, the pace of recovery is gaining momentum.  Going forward, domestic demand, particularly private consumption and public sector spending, will continue to provide support for growth.   This is supported by the sustained implementation of fiscal measures, accommodative monetary policy and continued access to financing. 

Inflation continued to decline at a slower rate in October. The slower decline largely reflects the cumulative fall in retail fuel prices since June 2008 and the reduced pressure on food prices. Inflation is expected to turn positive in the coming months, as domestic economic conditions strengthen. In the absence of further unanticipated price adjustments and external influences, inflation is expected to remain modest in 2010.

With improving domestic economic conditions and as price pressures and inflation expectations are expected to remain contained going forward, the assessment is that the current monetary policy stance is appropriate and will continue to provide support for economic activity.

The meeting also approved the schedule of MPC meetings for 2010. In accordance with the Central Bank of Malaysia Act 2009, the MPC will convene six times a year. The Monetary Policy Statement will be released at 6 p.m. on the same day as the MPC meeting.