Domestic demand still very strong, says Zeti
KUALA LUMPUR: Bank Negara will maintain its key benchmark interest rate at 3% due to robust domestic demand unless the country's export growth is affected sharply by global developments, including the eurozone sovereign debt crisis.
Its governor Tan Sri Dr Zeti Akhtar Aziz said the central bank was closely monitoring the global situation.
Domestic demand was still very robust; it was the trade that had been affected by the developments in Europe, she said.
Zeti: Domestic demand was still very robust; it was the trade that had been affected by the developments in Europe.
Bank Negara would maintain interest rate at the current level unless export growth was affected sharply, Zeti said on the sidelines at the launch of the Financial InstitutionsDirectors Education Forum here yesterday.
“The domestic demand comprising of consumption is still strong, investments are robust and loan growth is also strong. These are the factors that will be taken into consideration in deciding the overnight policy rate (OPR),'' she said when asked whether Bank Negara was prepared to cut interest rates at its next monetary policy committee (MPC) in the event of any disruptive global growth.
Zeti said consumption was currently growing by 6% to 7% while investments, on the other hand, were growing by more than 10%. This, she said, was positive for the country's economy to remain in the range of 4% to 5% growth for this year .
The MPC maintained the key benchmark interest rate or OPR at 3% for the sixth consecutive meeting, citing that domestic demand had continued to support growth, driven by firm consumption and investment activity and expected this trend to continue.
Data released by central bank for the first quarter showed that gross domestic product expanded by 4.7% year-on-year supported mainly by domestic activities.
Malaysian exports contracted for the second consecutive month in April from a year earlier on weaker electrical and electronics products, and commodities sales to developed economies.
Exports for the month fell 0.1% to RM57.74bil from RM57.8bil previously, while imports rose 7.4% to RM50.23bil. - The Star
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