Malaysian central bank keeps policy rate at 3%

Malaysia's central bank announced Thursday that the Overnight Policy Rate will be maintained at 3 percent. The central bank said in a statement that the Monetary Policy Committee "considers the current stance of monetary policy to be appropriate given the outlook for inflation and growth." Malaysia's inflation remained low at 1.6 percent in the first five months of the year and is expected to remain modest despite a potential rise in the second half of the year due to domestic supply and cost factors. Pressures from global commodity prices are also likely to be contained given the moderate global growth prospects, the central bank said. It said domestic demand has continued to support growth in Malaysia amid the continued moderation in external demand. Malaysia's export declined for the fourth consecutive month in May, dropping 5.8 percent compared to a year ago, the latest figure showed. The central bank warned that the sustained weakness in the external sector may affect the overall growth momentum. "Going forward, private consumption is expected to remain steady underpinned by income growth and stable labor market conditions," the central bank said. "Capital spending in the domestic-oriented industries and the ongoing implementation of infrastructure projects will also support investment activity," it added.