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16 September 2019
BUSINESS

Malaysia keeps policy rate unchanged as growth steadies

The bank kept its growth projection for this year unchanged at 4.3 to 4.8 per cent but said it was subject to further downside risks from worsening trade tensions and other global uncertainties.

MALAYSIA RINGGIT/BLOOMBERG


Malaysia’s central bank kept its benchmark interest rate unchanged for a second straight meeting as the economy posts steady growth despite mounting global risks, reported Bloomberg.

The central bank held its overnight rate at three per cent, saying the current policy is accommodative and supports the economy.

In a statement, Bank Negara Malaysia (BNM) said that domestic drivers of growth, alongside a stable labour market and wage growth, are expected to remain supportive of economic activity.

Additionally, the central bank said that on the external front, Malaysia’s diversified exports will partly mitigate the impact of softening global demand.

Malaysia’s central bank was one of the first in Asia to cut interest rates this year with a 25 basis-point cut in May 2019. While its peers have since moved ahead with bigger-than-expected cuts, Malaysia has stayed on hold with its economy growing above expectations inflation low and stable.

The central bank said headline inflation is expected to inch up into next year but remain generally low, given the subdued outlook for oil prices and policy measures to keep food prices in check.

External risks such as the US-China trade war have remained a factor for Malaysia. The country may be benefiting from businesses relocating operations from China to Southeast Asia amid the trade war, but the greater risk of a global recession could weigh on investor sentiment.

As one of the few net energy exporters in the region, Malaysia’s economy is also sensitive to geopolitical tensions that affect commodity output and prices.


RELATED STORIES: BANK NEGARA MALAYSIA BENCHMARK INTEREST RATE US-CHINA TRADE WAR DIVERSIFIED EXPORTS

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