KUALA LUMPUR- Malaysia’s central bank kept its benchmark interest rate unchanged on Thursday, as expected, saying monetary policy was supportive of the economy and consistent with the outlook for inflation and growth.
Bank Negara Malaysia maintained its overnight policy rate at 3.00 percent, where it has been since May 2023, in line with market expectations the central bank will stand pat on rates until at least the end of 2025.
“Despite external uncertainties, the strength in economic activity is expected to be sustained in 2025, anchored by domestic demand,” the central bank said in a statement.
Regional peers, such as Bank Indonesia, the Bank of Thailand, and the Philippine central bank, have cut rates to support sluggish growth.
Malaysia’s government and central bank have forecast the economy to expand between 4.5 percent and 5.5 percent in 2025, following 5.1 percent growth in 2024.
“However, the outlook for global growth, inflation and trade is subject to considerable uncertainties surrounding tariff and other policies from major economies and geopolitical developments,” the central bank said.
It expects Malaysia’s inflation rate to remain manageable in 2025 amid easing global cost conditions and the absence of excessive domestic demand pressures. Headline and core inflation stood at 1.7 percent and 1.8 percent respectively in January, the bank added.
While financial markets could experience heightened bouts of volatility due to global uncertainties, the central bank said a favorable domestic outlook and structural reforms would help support the ringgit currency.
Malaysia’s economy grew faster than expected in the fourth quarter of 2024 amid strong domestic demand and a recovery in exports, the central bank said, as it expects investment activities and household spending to drive growth this year.
Bank Negara Malaysia said the 5 percent year-on-year growth in gross domestic product during October-December was driven by domestic demand, strong investment activity, and sustained household spending.
But it cautioned that the outlook remains subject to risks, including an economic slowdown in major trading partners amid heightening expectations of global trade and investment restrictions, as well as lower-than-expected commodity production.
The fourth-quarter reading was above both an official advance estimate and analysts forecast in a Reuters poll of a 4.8 percent expansion, but softer than the 5.4 percent expansion in the previous quarter.
