Malaysia’s central bank left its key interest rate unchanged, as widely expected, on Thursday.
The Monetary Policy Committee of Bank Negara Malaysia decided to maintain the overnight policy rate at 1.75 percent. The MPC assessed the current stance of monetary policy as appropriate and accommodative.
Headline inflation in 2022 is projected to remain moderate as the base effect from fuel inflation continues to dissipate. The bank expects core inflation to be modest, with the upside risk partly contained by the continued slack in the economy and labor market.
The domestic growth recovery will strengthen this year, driven by the expansion in global demand and higher private sector expenditure, amid improvements in the labor market and continued targeted policy support, the bank said.
BNM is likely to want to keep rates low to support the recovery, Alex Holmes, an economist at Capital Economics, said.
The upshot is that interest rates will remain on hold throughout 2022, the economist added. In contrast, financial markets are pricing in at least two 25 basis point rate hikes.