Malaysia CB Holds Key Rate Unchanged For Third Time

(RTTNews) - Malaysia's central bank left its key interest rate unchanged for a third policy session in a row, as it expects growth to remain firm supported by private consumption and inflation to remain modest.

The Monetary Policy Committee of Bank Negara Malaysia decided to leave the overnight policy rate at 3.00 percent. The decision was in line with expectations.

"At the current level of the OPR, the stance of monetary policy remains accommodative and supportive of economic activity," the central bank said in a statement.

The previous change in the interest rate was a quarter-point reduction in May, which was the first cut since July 2016.

Overall, growth of the Malaysian economy is expected to be within projections in 2019 and the pace sustained going into 2020, the bank said. The BNM has projected growth to come in the range of 4.3-4.8 percent this year.

That said, this projection remains subject to downside risks, mainly stemming from uncertainties in global economic and financial conditions as well as weakness in commodity-related sectors, the BNM added.

Average inflation is expected to remain modest in 2020 mainly due to the lapse in the impact from consumption tax policy changes, the lifting of the domestic retail fuel price ceiling, and measures in place to contain food prices.

Core inflation is expected to remain stable, underpinned by the continued expansion in economic activity and in the absence of strong demand pressures.

"With growth set to slow sharply over the next few quarters and inflation likely to remain subdued, we think the central bank will ease policy again early next year," Capital Economics economist Alex Holmes said.

Capital Economics expect another 25 basis points rate cut in the first half of next year.
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