Of note, the new interest rate framework which was implemented in 2004 introduced the Overnight Policy Rate (OPR) as a new policy rate and contributed towards improvements in the conduct of monetary operations. This not only played an integral role in enhancing the effectiveness of our monetary policy transmission, it also encouraged a more market-oriented financial system. At the same time, foreign exchange administration rules were liberalised, which created the preconditions for us to shift to a flexible exchange rate regime in 2005. These developments laid the necessary foundations for the formulation of monetary policy to be eventually formalised following the enactment of the Central Bank of Malaysia Act 2009. The Act was a significant milestone – it institutionalised the autonomy of the Bank in the formulation of monetary policy and provides greater flexibility in monetary policy implementation. Prior to the Act, the MPC, which was an advisory committee supporting the Governor, had meetings that typically took place only within a day. In its current form, the MPC meetings are now conducted over two days. The additional time is noteworthy, as it enabled the evolvement of the MPC towards a more robust, inclusive and comprehensive decision-making platform. This extension allocates sufficient time on the first day for in-depth presentations by staff and discussion amongst the MPC members on the implications of new economic developments. On the second day, the MPC members deliberate and decide on the appropriate policy after having carefully appraised and internalised the assessment and discussion from the first day.

Muhammad bin Ibrahim: Some thoughts on the new economy Speech by Mr Muhammad bin Ibrahim, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Malaysian Institute of Economic Research’s (MIER) 30th Anniversary Dinner, Kuala Lumpur, 26 September 2016. * * * Distinguished Guests, Ladies and Gentlemen, I am honoured to speak here at the Malaysian Institute of Economic Research’s (MIER) 30th Anniversary Dinner. I would like to commend MIER on the institute’s continuous efforts in expanding economic knowledge, and the commitment to research over the past 30 years. Today, we meet at a time where the global economy is becoming increasingly dynamic and challenging, underpinned by complex global interlinkages and shifting trends. The challenges posed to policymakers are immense. The rapidly evolving world also necessitates swift, yet pragmatic policies in order for us to remain ahead of the competition. Against this backdrop, a deep understanding of the core issues is absolutely critical in supporting evidence-based policy responses; not only to manage risks but also to better leverage on opportunities. Tonight, I will be sharing some thoughts about this “new world economy” that we are in, and along the way, share some policy insights and research ideas for the many economists and policy thinkers in this room. Global macroeconomic environment is becoming increasingly challenging The periods of strong global growth have become something of a distant memory to us. Global growth for the past 5 years has averaged 3.5%, well below the pre-crisis average of 5.1%.