KUALA LUMPUR – Bank Negara Malaysia (BNM) remains committed to ensuring price stability in support of sustainable domestic economic growth, amid challenges from global developments.
In its Annual Report 2022 released today, BNM said further normalisation to the degree of monetary policy accommodation would be informed by the evolving conditions and their implications to the domestic inflation and growth outlook.
It said monetary operations will continue to ensure sufficient liquidity in the foreign exchange, money, and government bond markets.
“They will also complement our other policies to ensure the smooth functioning of domestic financial markets and financial intermediation.
“Now that the worst of the pandemic crisis is behind us, we must focus on restoring our economic strength and foundation to prepare for any future shocks, which entails rebuilding policy space, and the depleted buffers of households and businesses through future-proofing our social protection coverage, encouraging savings, and strengthening the agility and innovation of businesses,” it added.
BNM will continue to work with its stakeholders on relevant policy measures, particularly structural reforms, to strengthen Malaysia’s overall economic resilience for the future.
Overall, the monetary policy remains accommodative and supportive of economic growth in 2022.
The central bank’s monetary policy committee has gradually increased the overnight policy rate (OPR) through four 25 basis point adjustments at the May, July, September, and November meetings.
This resulted in a total increase of 100 basis points, bringing the OPR to 2.75% from a historical low of 1.75% in 2020.
It said following the OPR adjustments, interest rates in the wholesale and retail markets trended higher.
In the retail market, returns to depositors and lending rates increased, broadly in line with the OPR increases.
“Throughout this period, the central bank’s monetary operations focused on ensuring sufficient liquidity in the banking system, including after the expiry of the statutory reserve ratio flexibility on December 31, 2022.
“This enabled the orderly functioning of domestic financial markets and financial intermediation in the economy,” BNM said.
Given Malaysia’s flexible exchange rate regime, ringgit fluctuations should be expected to occur from time to time, said the central bank.
“In fact, since reaching a peak of RM4.7477 on November 4, 2022, the ringgit rebounded and reached RM4.2435 on January 30, 2023.
“As challenges in the global economy continue to evolve, US dollar developments are likely to continue to be the main factor affecting the ringgit exchange rate and our financial system has held up well throughout this period and continued to facilitate intermediation to support the broader economy,” it said.
Reflecting on the events of the year, BNM will continue to proactively monitor developments and ensure that Malaysia’s economy continues to be served by an exchange rate regime that supports its mandate to achieve monetary and financial stability conducive to sustainable growth of the economy. – Bernama, March 29, 2023
.jpeg)
.jpg)
