All 11 economists surveyed in a Reuters poll had forecast that Bank Negara Malaysia (BNM) would leave its overnight policy rate (OPR) unchanged.

In a statement issued after its policy review, the central bank said it expects domestic demand to remain the key driver of growth, with private consumption underpinned by stable employment and wage growth.

Private investment will be supported by ongoing projects in both the export- and domestic-oriented industries, it said.

"Sustained growth in private sector activity is expected to offset lower public spending arising from the ongoing fiscal consolidation by the government," the central bank said.

The policy statement also struck a stable tone.

"At the current level of the OPR, the degree of monetary accommodativeness is consistent with the intended policy stance," BNM said.

In November, Prime Minister Mahathir Mohamad's government laid out an expanded budget for 2019, looking to boost revenue in a slowing economy while grappling with large debts left by the previous administration.

The government expects the economy to have grown 4.8 percent in 2018, and nudge up to 4.9 percent next year.

The central bank said risks to growth were tilted to the downside, primarily from the potential escalation of trade tensions and commodity-related shocks.

"On balance, the Malaysian economy is expected to remain on a steady growth path in 2019," Bank Negara said.

The central bank said in its statement slower growth in the major economies and trade tensions continued to apply downside risks to Malaysia growth prospects.

Capital Economics said in a note that it expected the central bank to ease policy later this year, once growth began to stutter.

"With growth set to struggle for momentum this year, we think it only a matter of time before the central bank starts to loosen monetary policy. We have pencilled in a rate cut for the third quarter of 2019," it said.

The ringgit was down 0.05 percent against the dollar in midday trade, as most Asian currencies weakened as a slowdown in China's economy raised concerns of slowing regional and global growth.

Inflation will likely pick up pace in 2019 after a slow 2018, as the impact of changes to the country's consumption tax policy lapsed, the central bank said.

Inflation has been muted since the government scrapped an unpopular Goods and Services Tax in June last year, and replaced it with a narrower Sales and Services Tax three months later.

The annual inflation rate was 0.2 percent in December, lower than expected and matching the pace in August, when it hit a three-and-half-year low, government data showed on Thursday.

(Reporting by Rozanna Latiff; Editing by Simon Cameron-Moore)