KUALA LUMPUR- Malaysia’s central bank kept its key policy rate unchanged on Wednesday, reflecting a positive economic growth outlook and steady inflation but issued a warning about potential currency volatility.
At its final policy meeting of the year, Bank Negara Malaysia (BNM) maintained its overnight policy rate at 3.00 percent, as widely expected and where it has been since May 2023.
The central bank said its monetary policy stance remains supportive of the economy and aligns with the current assessment of inflation and growth prospects.
“The latest indicators point towards sustained strength in economic activity driven by resilient domestic expenditure and higher export activity,” it said in a statement.
Economists polled by Reuters earlier expected the central bank would stand pat on rates until at least 2026.
“We don’t foresee any changes to the policy rate in 2025. While a couple of analysts have penciled in rate cuts for next year, the majority share our view,” Harry Chambers, economist at Capital Economics, said in a note.
In the budget last month, the government raised its forecast for economic growth in 2024 to a range of 4.8 percent to 5.3 percent, from 4 percent to 5 percent previously.
Official advance estimates put annual economic growth at 5.3 percent in the third quarter, slower than the 5.9 percent growth rate in the second quarter.
The central bank said headline and core inflation remain modest, averaging 1.8 percent year-to-date, and was expected to stay manageable going into 2025.
However, the central bank cautioned that the inflation outlook remains subject to the impact of government policies as well as global commodity prices and financial market developments.
This year the government cut costly blanket subsidies for diesel, electricity, and chicken, among others, and plans to extend the policy to a widely used transport fuel in the middle of 2025.
