Malaysian central bank’s benchmark rate unchanged


Thu, Sep 06, 2018 - Page 10

Malaysia’s central bank yesterday kept its benchmark interest rate unchanged on the back of low inflation and tempered economic growth expectations for the year.

Bank Negara Malaysia left the overnight policy rate at 3.25 percent, it said in a statement in Kuala Lumpur, as predicted by all 17 economists in a Bloomberg survey.

“In the immediate term, the economy faces downside risks stemming from heightened trade tensions, prolonged weakness in the mining and agriculture sectors, and some domestic policy uncertainty,” the bank said. “On balance, the Malaysian economy is expected to remain on a steady growth path.”

The central bank is under little pressure to tighten policy, in contrast to peers in Indonesia and the Philippines, which are facing calls for more interest-rate hikes.

Inflation in Malaysia remains low, and its currency and economy have been relatively sheltered from the rout sweeping across emerging markets.

Inflation, which eased to below 1 percent in June and July, is expected to edge upward through next year, the bank said.

A sales and services tax took effect in September last year, following three months of no consumption levies from June, when the government scrapped a 6 percent levy.

“The impact of the changes in the consumption tax policy on headline inflation will be transitory and lapse towards the end of 2019,” the bank said.

“Underlying inflation is nevertheless expected to remain relatively stable,” it said.

The Malaysian ringgit has lost 2.4 percent this year, compared with a 6.8 percent decline in the Philippine peso and a more than 9 percent drop in the Indonesian rupiah.