Malaysia Central Bank Maintains Its Policy Rate at 3.0%

Written by Ying Xian Wong

The central bank of Malaysia maintained its benchmark interest rate, as it believes that the country's economic expansion has slowed down due to a decrease in inflation.

Bank Negara Malaysia announced on Thursday that it would keep its overnight policy rate at 3.00%. This was in line with the predictions of all nine economists surveyed by The Wall Street Journal.

BNM stated that the economy is currently being supported by a slightly accommodative monetary policy stance at the existing OPR level.

BNM holds the perspective that the chances of future financial imbalances are constrained.

According to the bank, Malaysia's economy has experienced a slowdown in recent months, mainly due to a decline in exports as external demand expects to slow down. However, the bank predicts that for the rest of the year, economic growth will be sustained by the strength of domestic demand.

The blog stated that the favorable labor market conditions, especially in the sectors focused on domestic affairs, are still supporting household spending.

The economy will receive support from the consistent growth in the number of tourists visiting and the ongoing advancements in Malaysia's long-term infrastructure ventures, according to the statement.

The bank is also concerned about potential risks to Malaysia's growth prospects due to the global economic slowdown being worse than anticipated.

The central bank predicts that both headline and core inflation will decrease in the latter part of 2023. However, it acknowledges that there are potential dangers to its forecast, such as ongoing core inflation, shifts in domestic policies, fluctuations in global commodity prices, and developments in the financial market.

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