Malaysia’s Central Bank Keeps Interest Rate Unchanged
Malaysia’s central bank, Bank Negara Malaysia, has decided to keep its benchmark interest rate unchanged at 3% on Thursday. This decision was in line with market expectations, with the central bank indicating that it will maintain the rate until at least the end of 2025.
Economic Outlook Remains Strong
Despite external uncertainties, the central bank expects the strength in economic activity to be sustained in 2025, driven by domestic demand. The bank has forecast the economy to expand between 4.5% and 5.5% in 2025, following 5.1% growth in 2024.
Inflation Rate Expected to Remain Manageable
The central bank expects Malaysia’s inflation rate to remain manageable in 2025, with headline and core inflation standing at 1.7% and 1.8% respectively in January. The bank attributed this to easing global cost conditions and the absence of excessive domestic demand pressures.
Global Uncertainties and Currency
The central bank noted that the outlook for global growth, inflation, and trade is subject to considerable uncertainties surrounding tariff and other policies from major economies and geopolitical developments. This may lead to heightened bouts of volatility in financial markets, but the bank is confident that a favourable domestic outlook and structural reforms will support the ringgit currency.
Conclusion
In conclusion, Bank Negara Malaysia’s decision to keep the interest rate unchanged is consistent with the bank’s assessment of the economy and inflation outlook. The bank’s confidence in the domestic economy and its ability to navigate global uncertainties is reflected in its forecast for 2025.
Frequently Asked Questions
Q: Why did Bank Negara Malaysia keep its interest rate unchanged?
A: The central bank decided to keep its interest rate unchanged at 3% due to its assessment of the economy and inflation outlook.
Q: What is the forecast for Malaysia’s economic growth in 2025?
A: The central bank has forecast the economy to expand between 4.5% and 5.5% in 2025, following 5.1% growth in 2024.
Q: What is the outlook for inflation in 2025?
A: The central bank expects Malaysia’s inflation rate to remain manageable in 2025, with headline and core inflation standing at 1.7% and 1.8% respectively in January.
Q: What are the key uncertainties facing the Malaysian economy?
A: The central bank highlighted the impact of global growth, inflation, and trade, as well as geopolitical developments and tariff policies, as key uncertainties facing the Malaysian economy.
