Malaysia Holds Key Rate Amid Low Inflation, Ringgit Measures

-- Malaysia kept its benchmark interest unchanged on Thursday, saving its policy ammunition for later amid looming risks to inflation and ongoing measures to defend the ringgit.Americans Are Racking Up ‘Phantom Debt’ That Wall Street Can’t TrackBank Negara Malaysia left the overnight policy rate at the post-pandemic high of 3%, as expected by all 24 economists in a Bloomberg survey. The central bank last adjusted borrowing costs a year ago, when it raised the benchmark by 25 basis points.

A strengthening economy, low inflation and a currency that’s outperformed most peers in Southeast Asia this year support BNM’s decision to stand pat, even after Indonesia’s surprising rate hike last month. Early data showed Malaysia’s growth quickened by the most in a year last quarter, while rising tourist arrivals, multi-year projects and the tech upcycle are set to improve the economy’s prospects going forward, according to the central bank.

Malaysia plans to phase out blanket fuel subsidies and replace it with targeted assistance this year, potentially stoking price pressures. But details are scarce, making it tricky to predict its precise impact. That’s reflected in the central bank’s wide inflation forecast range of between 2% and 3.5% for 2024.On the ringgit, BNM said it does not reflect Malaysia’s economic fundamentals and growth prospects.

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