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Malaysia's Central Bank Keeps Rate Unchanged

Malaysia's central bank left its benchmark rate unchanged on Wednesday, as policymakers assessed the current stance as appropriate and accommodative.

The Monetary Policy Committee of Bank Negara Malaysia decided to hold the overnight policy rate at 1.75 percent. Economists had forecast a quarter basis-point reduction.

Policymakers said they remain committed to utilize its policy levers as appropriate to create enabling conditions for a sustainable economic recovery.

The Statutory Reserve Requirement, or SRR ratio was retained at 2.00 percent.

Economic growth for 2020 was expected to be near the lower end of the earlier forecasted range. The committee cautioned that the near-term growth outlook will be affected by the re-introduction of stricter containment measures, though the impact will be less severe than that experienced in 2020.

The growth trajectory was projected to improve from the second quarter, driven by the recovery in global demand, turnaround in public and private sector expenditure.

For 2021, headline inflation was forecast to average higher, primarily due to higher global oil prices. At the same time, underlying inflation was projected to remain subdued amid continued spare capacity in the economy.

The Bank appears to be in wait and see mode, but given the poor near-term outlook for the economy, further easing is likely, Alex Holmes, an economist at Capital Economics, said. The economist expects a 25 basis-point rate cut at the Bank's next meeting in March.

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