By Ying Xian Wong
Malaysia's central bank continued to keep its benchmark interest rate on hold, standing pat for a fourth straight meeting as inflation remains in check for now.
Bank Negara Malaysia maintained its overnight policy rate at 3.00% on Wednesday, stretching a holding pattern that started in July 2023. Its last hike was in May.
The decision was in line with the expectations of nine economists polled by The Wall Street Journal. Bank Negara had been widely anticipated to stand pat despite data last week showing that the economy finished 2023 on weak footing.
"At the current OPR level, the monetary policy stance remains supportive of the economy and is consistent with the current assessment of the inflation and growth prospects," Bank Negara said.
The central bank said economic growth in 2024 may improve, driven by a recovery in exports, resilient domestic expenditure, continued employment and wage growth as well as higher tourism spending. However, Bank Negara thinks the growth outlook remains subject to downside risks including weaker-than-expected external demand and larger declines in commodity production.
Both headline and core inflation for 2023 were within expectations, Bank Negara said. It expects headline inflation to remain modest this year, but said factors like changes to domestic policy on subsidies and price controls, global commodity prices and developments in financial markets pose risks to its outlook.
For Bank Islam's chief economist, Firdaos Rosli, a strength of Malaysia's economy has been that inflation isn't "misbehaving" like in other countries. However, if the country's economy is to weather external headwinds and mounting trade woes, "a somewhat accommodative monetary policy stance" will be needed to support growth and fend off the risk of a slowdown, he said.
Write to Ying Xian Wong at yingxian.wong@wsj.com
(END) Dow Jones Newswires
01-24-24 0224ET
