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Zeti hints at Malaysia not cutting interest rate

June 12, 2012

The country's domestic demand was still strong and robust, and trade has been affected by the developments in Europe.

KUALA LUMPUR: Bank Negara Malaysia (BNM) governor, Zeti Akhtar Aziz, has hinted at Malaysia not cutting interest rate at the next monetary policy committee (MPC) meeting as domestic demand is strong and robust, unless the export growth declines sharply.

Zeti said BNM would monitor the conditions closely.

She said currently, the country’s domestic demand was still strong and robust and trade has been affected by the developments in Europe.

“So, we really have to balance it because domestic demand, comprising consumption growing at 7%, investment of over 10% and loan growth, is still robust and strong. All these factors will be taken into consideration.

“This is positive for us going forward and it is likely the growth will be in the range of 4% to 5% unless the export growth continues to be affected sharply by the development around the world,” she told reporters after delivering a keynote address at the Financial Institution Directors Education Forum here today.

Zeti said this when asked whether Malaysia’s interest rate regime would be affected if Greece were to exit the eurozone.

Greece will hold elections on June 17 which could decide its future in the eurozone.

BNM kept the benchmark overnight policy rate unchanged at 3% for the sixth time at the MPC meeting on May 11.

The next meeting is scheduled on July 5, 2012.

Malaysia’s exports in April 2012 dipped slightly to RM57.74 billion from RM57.8 billion a year ago, weighed down by slower growth in the major economies and Europe’s debt crisis.

– Bernama


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