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Malaysia Central Bank Holds Interest Rate At 3%

5/11/2012 6:52 AM ET

Malaysia's central bank on Friday decided to keep its key interest rate unchanged for the sixth time in a row. The decision was in line with economists' expectations.

The Bank Negara Malaysia maintained its overnight policy rate at 3 percent. The last policy change was carried out in May 2011, when the monetary policy committee hiked the rate by 25 basis to the current level.

The central bank said that while the economy is affected by the global developments, domestic demand has continued to support growth, driven by firm consumption and investment activity.

The bank said it expects headline inflation to moderate in 2012 with improved domestic supply and stable demand conditions. However, upside risks to inflation could emerge, particularly from global supply disruptions and result in higher global prices for energy and commodities, it noted.

Malaysia's annual inflation slowed modestly to 2.1 percent in March from 2.2 percent in February. The country's economy expanded at a slower rate of 5.2 percent annually in the fourth quarter than third quarter's 5.8 percent.

by RTT Staff Writer

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