Malaysia Holds Key Rate Steady at 3.25%

Malaysia’s central bank left the overnight policy rate unchanged at 3.25 percent on November 6th as current policy stance is considered appropriate. Yet, policymakers showed concerns over risks to global growth and the impact it may have on the national economy.

Statement by the Bank Negara Malaysia:

The global economy continues to expand at a moderate pace. Growth across the advanced economies has been uneven. In Asia, growth is being sustained by the continued expansion in domestic demand and exports. Looking ahead, while the overall global growth momentum is expected to improve, the growth forecast has been revised downwards due to weakening economic activity in a number of major economies. Consequently, the downside risks to global growth have increased. Volatility in the international financial markets has also risen.

For Malaysia, while domestic demand has continued to support growth, exports have shown signs of moderation. Going forward, domestic demand will still remain the key driver of growth. Private consumption is expected to moderate, but investment activity is projected to remain robust, supported by broad-based capital spending by both the private and public sectors. While the moderating trends will affect the overall growth prospect, the Malaysian economy is still projected to remain on a steady growth path.

Inflation is projected to trend higher for the remainder of the year and will continue to be above its long-term average next year due to domestic cost factors. However, the absence of external price pressures and more moderate demand conditions are expected to mitigate the impact of these cost factors on the underlying inflation.

The current stance of monetary policy remains accommodative and is assessed to be appropriate given the developments in monetary and financial conditions. Moving forward, the MPC will continue to carefully assess the balance of risks surrounding the outlook for domestic growth and inflation.  The MPC will also remain vigilant to the risks of destabilising financial imbalances.

Malaysia Holds Key Rate Steady at 3.25%

Bank Negara Malaysia | Carolina Cunha |
11/6/2014 11:32:37 AM