- Bank Negara Malaysia has decided to maintain the Overnight Policy Rate (OPR) at 3.25% during the final Monetary Policy Committee (MPC) meeting for 2015.

- The next MPC meeting will convene on 20 and 21 January 2016. Refer to Chart 2 for the schedule of MPC meetings for 2016.

- The global economy continues to grow at a moderate pace. The economic recovery in the major advanced economies has remained modest.

- Going forward, downside risks to global growth remain high arising from the moderating growth momentum in several major economies, uncertainty surrounding energy and commodity prices and possible disorderly market conditions arising from policy shifts in major economies.

- Domestic demand will continue to be the key driver of growth, with an additional lift from exports as global growth improves.

- The Malaysian economy will continue to benefit from having diversified sources of growth, economic flexibility, low unemployment, manageable level of external debt and a well-capitalised banking system.

- According to BNM, headline inflation is expected to remain relatively stable for the rest of 2015. For 2016, headline inflation is expected to be higher, to peak in the first quarter and moderating thereafter.

- On a YTD basis, inflation had registered +1.9% as at September 2015. However, we note that inflation probably picked up to an average of 3.1% in 4Q15 owing to the uptick in prices for tobacco and transport cost.

- Other than that, global and domestic developments have continued to affect the Ringgit and domestic financial markets.

- However, domestic liquidity continues to be sufficient and the financial system remains sound with healthy growth in financing. Excess liquidity for the banking system is estimated at RM225.2bil as at end-September (or +9.6% MoM).

- At the current level of the OPR, the stance of monetary policy remains accommodative and supportive of economic activity. The MPC recognises that there are heightened risks in the global economic and financial environment.

Source: AmeSecurities Research - 6 Nov 2015