Malaysia central bank surprises by holding key rate at 2.75%

A general view of the Central Bank of Malaysia (Bank Negara Malaysia) in Kuala Lumpur, Malaysia. REUTERS/Lim Huey Teng/File photo

KUALA LUMPUR  – Malaysia’s central bank on Thursday unexpectedly kept its benchmark interest rate unchanged at 2.75-percent, saying it was assessing the impact of four consecutive rate hikes last year.

“Today’s decision allows the monetary policy committee to assess the impact of the cumulative past overnight policy rate (OPR) adjustments, given the lag effects of monetary policy on the economy,” Bank Negara Malaysia said in a statement.

“Further normalisation to the degree of monetary policy accommodation would be informed by the evolving conditions and their implications to the domestic inflation and growth outlook,” it said.

All but one of 27 economists polled by Reuters expected the bank to raise the rate to 3 percent.

BNM has increased rates by a total of 100 basis points since last May from a historic low of 1.75 percent, as it looked to rein in inflation amid robust growth.

Malaysia’s economy has recovered strongly from a pandemic-induced slump, with BNM expecting growth in 2022 to surpass its 6.5 percent-7 percent expansion forecast.

The government however expects growth to moderate to 4 percent-5 percent this year, amid a global slowdown.