Kuala Lumpur, Malaysia’s central bank, announced on Thursday that it would keep benchmark interest rates unchanged. The decision comes as no surprise, as economists predict that rates will remain on hold for the rest of the year. Despite the economy experiencing a high growth rate of 8.7% last year, concerns about slowing global demand and a weak currency have clouded the outlook for the Southeast Asian nation.
Bank Negara Malaysia (BNM) decided to maintain its overnight policy rate at 3 percent, aligning with market expectations. The central bank emphasized that its current interest rate is “slightly accommodative” and supportive of the economy. The Monetary Policy Committee also assured that it would ensure a conducive monetary policy stance for sustainable economic growth and price stability.
BNM projected a decline in headline and core inflation in the second half of the year. The bank expects headline inflation to average between 2.8 percent and 3.8 percent in 2023, compared to last year’s figure of 3.3 percent. Economic growth is also anticipated to moderate to 4 percent to 5 percent this year.
Leading economist Alex Holmes from Oxford Economics stated that they do not anticipate any policy alterations from BNM within the next 12 months. However, he expressed concerns about the weak ringgit, which is the worst-performing currency in Southeast Asia this year. Holmes believes that the ringgit’s weakness could potentially lead to more interest rate hikes and capital outflows.
The decision to maintain rates was widely expected by economists, with 22 out of 25 polled by Reuters predicting no change. BNM surprised the market in May when it raised rates for the fifth time, citing the need to manage persistent inflation amid strong domestic demand. However, headline inflation has eased in recent months, with the consumer price index rising by 2.8 percent in May.
Looking ahead, BNM will closely monitor policy changes in subsidies and price controls, as they could impact inflation. Prime Minister Anwar Ibrahim has already announced a review of the government’s subsidies program.
Today’s rate decision marks the first major policy announcement under the newly appointed governor, Abdul Rasheed Ghaffour, who assumed the position on July 1.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
Denial of responsibility! Samachar Central is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
