She stressed that any decision on the overnight policy rate (OPR) would not be solely in tandem with other central banks but rather be more focused on the “domestic economic environment”.
“We do not set our OPR based on other central banks’ decisions on their monetary policy,” she said after announcing Malaysia’s gross domestic product (GDP) results for the fourth quarter of 2022.
“We look not just at historical numbers, but recent developments on the global and local fronts. All these factors affect our outlook for domestic growth,” she added.
Nor Shamsiah said the Monetary Policy Committee (MPC) would continue to calibrate the monetary policy to ensure sustainable domestic growth and price stability, in line with BNM’s mandate.
In a surprise move, the MPC paused the OPR hike cycle at 2.75% during its first meeting last month after raising the rate by 25 basis points (bps) four times last year. The last hike was to increase the OPR to 2.75% last November.
The consensus among various economists and research houses is that BNM may hike the OPR with another one or two more 25 bps increases this year.
“It is not uncommon for central banks to take an intermittent pause when they raise or lower rates. It allows them to assess the effect, given that monetary policy works with a lag.
“The pause gives us greater clarity, and allows MPC to assess all this, and it will be assessed at each meeting,” she said.
No recession on the horizon
Nor Shamsiah also said Malaysia is unlikely to fall into a recession this year as sustained domestic demand and spending are set to continue anchoring growth.
“So far, first quarter 2023 performance is showing more robust growth compared to the 7% recorded in Q4 2022. We do expect growth will continue in 2023, but at a much more moderate pace due to slower external demand.
“We are seeing sustained improvement in the job market and we are going to benefit from the positive impact from China’s reopening,’’ she stressed.
The government highlighted strong investment figures alongside a V-shaped recovery in tourism activities, enough to offset a moderation in exports that would emanate from a slower global growth demand.
Economic growth is also expected at the global level, and Nor Shamsiah noted the International Monetary Fund (IMF) has upgraded their GDP forecasts for 2022 and 2023.
In its latest projection, the IMF estimated a 2.9% expansion in 2023 versus the previous 2.7%.