KUALA LUMPUR: Bank Negara Malaysia (BNM) will remain steadfast in ensuring monetary stability to support sustainable economic growth in the long term.
At a press conference following the release of the central bank’s flagship publications — the 2024 Annual Report, Economic and Monetary Review, and Financial Stability Review for the Second Half of 2024 recently, BNM governor Datuk Seri Abdul Rasheed Ghaffour said the monetary operations will continue to ensure sufficient liquidity in the banking system and financial markets, complementing other policies to maintain smooth financial intermediation.
Despite uncertainties surrounding tariffs, policy shifts in major economies, and geopolitical conflicts, resilient domestic demand will serve as a crucial buffer against external shocks, he said.
“Investment activity is expected to remain robust, while household spending will stay resilient, supporting Malaysia’s economic expansion, while inflation is projected to remain manageable, with favourable domestic conditions providing a strong foundation for ongoing structural policy reforms,” he said.
In 2024, the Monetary Policy Committee (MPC) focused on assessing the potential impact of supply shocks from external disruptions and domestic policy reforms on the broader economy.
“As a demand management tool, monetary policy has limited direct influence on supply shocks, and any impact from Overnight Policy Rate (OPR) adjustments takes time to materialise.
“To safeguard price stability and sustainable growth, the MPC assessed both short- and long-term effects of these shocks on inflation and economic activity,” he said.
He said that amid an absence of excessive domestic demand and unanchored inflation expectations, the MPC observed limited signs of excessive spending, borrowing and risk-taking behaviour by households and businesses. He said the robust demand during the year was also driven by stronger investment activity, which will support an expansion of Malaysia’s productive capacity and preventing widespread and persistent price increases.
“As such, the MPC was able to look through these supply shocks without having to adjust the OPR. Overall, monetary policy continued to be supportive of economic growth in 2024,” he added.
Moving forward, Malaysia will need to attract more high-quality investments, foster digitalisation and build a future-ready workforce, according to him.
He said BNM will collaborate further with its stakeholders on relevant policy measures, particularly structural reforms, to enhance economic strength and raise Malaysia’s growth potential. – BERNAMA
