Domestic growth still strong, rates appropriate, says Bank Negara

June 20, 2012

KUALA LUMPUR, June 20 – Malaysia’s central bank governor Zeti Akhtar Aziz said domestic growth remains strong despite global economic uncertainties and that the country’s interest rates were “appropriate.”

In spite of the euro zone crisis, “domestic growth is still strong while inflation is moderating,” Zeti (picture) told reporters today. “At this point in time, unless there are any other significant developments in our assessment, then they (interest rates) are at the appropriate level.”

Economists expect interest rates to be kept unchanged for the rest of the year, but Bank Negara’s stand on being “accommodative” to the economy could lead to a surprise cut at a monetary policy meeting on July 5 if the domestic front slumps.

Patricia Oh, an economist at TA Securities, said the Malaysian economy is likely to be domestically-driven for the remainder of 2012, but it faced risks from the euro zone debt crisis.

“There could be some threats from the global international trade segment that could potentially bring down the overall trade surplus which has been slowing down as seen in April’s exports data,” she said.

The central bank has kept rates unchanged at 3.0 per cent for six straight meetings, saying that domestic inflation is expected to moderate in 2012 although Malaysia faced risks of global supply disruptions in energy and commodity markets. – Reuters