Malaysia Central Bank Holds Rate Steady For Second Session

bankofnegaramalaysia nov08 09mar23 lt

Malaysia's central bank left its key interest rate unchanged for the a second policy meeting in a row in order to assess the impact of the past interest rate hikes on the economy.

The Monetary Policy Committee of Bank Negara Malaysia decided to keep the Overnight Policy Rate unchanged at 2.75 percent.

Policymakers said the current stance of monetary policy remains accommodative and supportive of economic growth. The MPC said it will continue to measure the impact of the past rate hikes on the economy.

The bank has raised its benchmark rate by 100 basis points over the last year.

The MPC reiterated that further normalization to the degree of monetary policy accommodation would be informed by the evolving conditions and their implications to the domestic inflation and growth outlook.

Citing the slower growth in global economy, the central bank projected economic growth to moderate this year from 8.7 percent in 2022. Nonetheless, domestic demand will continue to boost growth, the bank noted.

Both headline and core inflation are also forecast to moderate over the course of 2023 as the existing price controls and fuel subsidies will limit upward pressures. The bank said the balance of risks to the inflation outlook is tilted to the upside.

With the economy likely to remain weak and inflation set to ease further over the coming months, interest rates are likely to stay on hold for the rest of the year, Capital Economics' economist Shivaan Tandon said.

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