KUALA LUMPUR: Bank Negara Malaysia’s Monetary Policy Committee has reduced the Overnight Policy Rate by 25 basis points to 2.50 per cent.
This was the second cut so far this year and was largely in line with economists’ expectations.
In January, Bank Negara reduced the OPR by 25 basis points to 2.75, the lowest since 2011.
The central bank said the latest cut was to provide a more accommodative monetary environment to support economic growth amid price stability and weakened global conditions.
The move means the ceiling and floor rates of the corridor of the OPR are correspondingly reduced to 2.75 per cent and 2.25 per cent respectively.
“Global economic conditions have weakened in the recent period. The ongoing Covid-19 outbreak has disrupted production and travel activity, especially within the region.
“This has also led to greater risk aversion, resulting in tighter financial conditions and a resurgence in financial market volatility,” it said in a statement today.
Bank Negara said downside risks to the global growth outlook had increased, particularly in the near term. However, a number of countries have implemented policy responses.
“With further anticipated policy measures, these actions are expected to mitigate the economic impact of Covid-19.”
Bank Negara said the Malaysian economic growth, particularly in the first quarter, would be affected by the Covid-19 outbreak primarily in the tourism-related and manufacturing sectors.
The weakness in the agriculture sector is also likely to persist in the first quarter.
For 2020, private and public sector activities would be supportive of growth, it added.
“Household spending is expected to grow at a slower pace amid moderate employment and income growth. Investment activity is projected to record a modest recovery, underpinned by ongoing and new projects, both in the public and private sectors.
“The 2020 economic stimulus package will also provide some support to economic activity,” it said, adding that domestic growth was expected to gradually improve in the second half of the year.