Malaysia Monday announced to lower its Overnight Policy Rate (OPR) by 0.25 percentage points to3.25 percent as it foresaw a deteriorated outlook for global growth.
The ceiling and floor rates of the country's prime bank rate also were lowered correspondingly to 3.50 percent and 3.00 percent respectively, Bank Negara Malaysia (BNM), the country's central bank, announced after its Monetary Policy Committee (MPC) met here on Monday.
"...the outlook for global growth has deteriorated further. Several major advanced economies are now in recession amid severe stress in their respective financial systems," said the bank in a statement.
"The sharp slowdown in global demand, the significant fall in commodity prices and the substantial decline in equity prices have exerted greater downward pressure on the growth prospects of regional economies," the bank said.
Global inflation also had begun to recede and this trend is expected to continue, it added.
These global developments had prompted authorities to provide significant liquidity support to the financial system and adopt fiscal stimulus and monetary easing to support economic growth, BNM said.
The adverse global developments had already affected the Malaysian economy, reflected in the slowdown in the country's export performance and lower equity prices, it noted.
However, the bank said, the country's domestic demand remained resilient and the sustaining domestic demand was key to ensuring a continued positive growth in the country next year.
"Given the heightened downside risks to growth and the diminishing inflationary pressures, the reduction in the OPR is a pre-emptive measure aimed at providing a more accommodative monetary environment," BNM said.
To further reduce the cost of intermediation, the bank also decided to reduce the Statutory Reserve Requirement (SRR) from 4 percent to 3.5 percent, with effect from Dec. 1 this year.
Source:Xinhua
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