Monetary policy
(1) In promoting monetary stability, the Bank shall pursue a monetary policy which serves the interests of the country with the primary objective of maintaining price stability giving due regard to the developments in the economy. (2) The monetary policy of the Bank shall be formulated and implemented autonomously by the Bank, without any external influence.
Monetary Policy Committee
(1) There shall be a committee of the Bank to be known as the “Monetary Policy Committee” which shall have the responsibility for formulating the monetary policy and the policies for the conduct of monetary policy operations. (2) The Monetary Policy Committee shall consist of the Governor, the Deputy Governors and not less than three but not more than seven other members. (3) Members of the Monetary Policy Committee may be appointed from amongst directors appointed under subsection 16(1) or officers and such members shall be appointed by the Board on the recommendation of the Board Governance Committee. (4) In addition to subsection (3), the Minister may appoint any other person as a member of the Monetary Policy Committee on the recommendation of the Board Governance Committee. (5) The Board Governance Committee, in recommending any person to be a member of the Monetary Policy Committee, shall at all times be satisfied that the person has the expertise and experience relevant to the responsibility and functions of the Monetary Policy Committee and be a person of probity, competence and sound judgment. (6) The members of the Monetary Policy Committee, other than the Governor and Deputy Governors, may each be appointed for a term not exceeding three years and shall be eligible for reappointment. (7) The Governor and Deputy Governors shall remain as members of the Monetary Policy Committee for so long as the Governor or Deputy Governors hold office as Governor or Deputy Governor. (8) No person shall be appointed as a member of the Monetary Policy Committee or shall remain as a member if he— (a) is or becomes a member of the Senate or House of Representatives or any Legislative Assembly; (b) is or becomes an officer or a director of any entity under the supervision of the Bank; (c) is or becomes a public officer unless otherwise approved by the Board or in the case of a person appointed under subsection (4), the Minister; (d) is convicted of a criminal offence involving dishonesty or of any criminal offence for which he has been sentenced to imprisonment; (e) is or becomes bankrupt or suspends payment or compounds with his creditor; (f) is or becomes involved in any activity which may interfere with his independence in discharging his duties; or (g) is not a Malaysian citizen. (9) The Board, or in the case of a person appointed under subsection (4), the Minister, may remove a member of the Monetary Policy Committee if— (a) the Board or the Minister, as the case may be, is satisfied that he is guilty of serious misconduct in relation to his duties as a member of the committee; (b) he becomes of unsound mind or incapable of carrying out his duties; or (c) he is disqualified under subsection (8). (10) The monetary policy of the Bank shall be formulated only at a duly convened meeting of the Monetary Policy Committee. (11) The Monetary Policy Committee shall be chaired by the Governor or in the absence of the Governor, by the Deputy Governor designated by the Board under subsection 15(7). (12) The First Schedule shall apply to the Monetary Policy Committee.
Publication of monetary policy statement
Following each meeting of the Monetary Policy Committee, the Bank shall publish a monetary policy statement on the decision made at the meeting and the rationale for such decision.
Monetary policy operations
(1) In this Part, “monetary policy operations” means any transaction undertaken by the Bank to manage liquidity in the financial system. (2) The Monetary Policy Committee shall establish general principles, guidelines, and terms and conditions for the monetary policy operations carried out by the Bank under this Part.
Conduct of monetary policy operations
(1) The Bank shall conduct monetary policy operations to implement the decisions of the Monetary Policy Committee. (2) For the purpose of conducting monetary policy operations, the Bank— (a) may issue securities in its own name provided that the total amount of securities issued shall not at any time exceed the amount of the foreign reserves; (b) may purchase, sell and redeem securities issued by the Bank pursuant to paragraph (a); (c) may require a reserve to be held at the Bank by each financial institution; (d) shall have the powers set out in section 75, in particular paragraphs (c), (d), (e), (f), (g), (h), (i) and (l); and (e) may undertake such other financial transactions involving currencies, securities, precious metals or other commodities or financial instruments as approved by the Monetary Policy Committee. (3) The terms and conditions of a requirement under paragraph (2)(c) may include— (a) the principles and method for the determination of reserve; (b) the penalty which shall not exceed one-tenth of one per centum of the amount of the deficiency for every day during which the deficiency continues or other sanctions for any non-compliance with the requirement; (c) in the case of— (i) an Islamic financial institution, the returns which may be given; or (ii) any other financial institution, the interest which may be paid, by the Bank on the reserve.
Provisions on this page are reproduced verbatim from official open data. See the attribution line.
Source: Laws of Malaysia, Attorney General's Chambers of Malaysia (lom.agc.gov.my). Not a copy of the Gazette printed by the Government Printer (Interpretation Acts 1948 and 1967, s 61).