Update Bank Negara ups OPR by 25bps to 2.75%

http://www.theedgemalaysia.com/highlights/169532-flash-bank-negara-ups-opr-by-25bps-to-275.html

Written by Joseph Chin
Thursday, 08 July 2010 18:11

KUALA LUMPUR: Bank Negara raised the Overnight Policy Rate (OPR) by 25 basis points to 2.75% at the Monetary Policy Committee (MPC) meeting on Thursday, July 8.

"The floor and ceiling rates of the corridor for the OPR are correspondingly raised to 2.50% and 3% respectively," it said.

The central bank said the MPC considered the new level of the OPR to be appropriate and consistent with the current assessment of the growth and inflation prospects.

It also said the stance of monetary policy continues to remain accommodative and supportive of economic growth.

On the domestic economy, it said recent trends in industrial production, financing activity, labour market conditions and external trade indicate that economic activity has remained robust in the second quarter.

"Going forward, while external developments may result in some moderation in the pace of growth, the domestic economy is expected to remain strong with continued improvements in private consumption and investment, and augmented by public investment spending," it said.

Domestic inflation recorded modest increases in April and May, mostly on account of supply factors.

Bank Negara said prices were expected to rise at a gradual pace in the coming months, in line with the continued improvement in domestic economic conditions, and taking into account possible adjustments in administered prices.

"Overall, inflation is, however, expected to remain moderate going into 2011," it said.