MALAYSIA’S lending rates may be kept at current levels, at least until Bank Negara Malaysia’s (BNM) next Monetary Policy Meeting (MPC), as domestic demand is still solid.
BNM governor Tan Sri Dr Zeti Akhtar Aziz said domestic demand, comprising consumption, investment and loan growth, remains robust.
Zeti said consumption is growing between six and seven per cent, while investment is expanding at more than 10 per cent.
“This is very positive for our economy going forward. It is very likely that we will still remain in the range of four per cent to five per cent growth, unless export growth continues to be affected very sharply by the development that is happening around the world.”
Zeti spoke to reporters after launching Financial Institutions Directors Education (FIDE) Forum here yesterday.
She was asked if BNM would cut interest rates if the global situation gets worse, amid talk that countries in Southeast Asia may consider lowering the rates to cushion the impact of a possible deeper European turmoil following a possible Greek exit from the euro.
Greece will hold its elections on June 17, which could decide its future in the eurozone.
Zeti said the central bank will continue to monitor the situation, although she acknowledged that Malaysia’s trade had been affected by the developments in Europe.
It is expected to decide on the interest rate policy during its MPC next month.
Zeti said BNM is pursuing several key initiatives in the area of governance of financial institutions.
“The bank has made proposals in the new financial services legislation, which will augment the general duties and responsibilities of the board under the Companies Act so as to provide emphasis to the specific key considerations in the responsibilities of boards of financial institutions.
“We hope this legislation will be tabled during the current Parliament sitting,” she said.
This includes a review of the supervisory process for assessing the suitability of persons to serve on boards of financial institutions.
“This review will leverage on the work by the FIDE Forum,” she said.
FIDE Forum was incorporated on October 27 2010 as a company limited by guarantee.
It is the brainchild of some of the former participants of the FIDE Programme, who subsequently became protem committee members of the team that supported the forum establishment.
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