Malaysia Holds Interest Rates Steady to Maintain Growth and Control Inflation
Bank Negara Malaysia (BNM) maintained its overnight policy rate at 3% in its first meeting of 2025, as anticipated by analysts. The central bank signaled its commitment to supporting economic growth while managing inflation.
Despite global central banks shifting towards easing, Malaysia faces minimal pressure to adjust interest rates. Domestic spending and investment are expected to mitigate external volatility. Inflation remains subdued, with the government planning to trim fuel subsidies by mid-2025.
BNM anticipates potential growth drivers such as tech advancements, tourism recovery, and accelerated project execution.
Economist Sanjay Mathur of Australia & New Zealand Banking Group highlights BNM's positive growth outlook, providing sufficient momentum to maintain interest rate stability amidst global uncertainty.
The central bank expects manageable inflation in 2025 due to easing global costs and lack of excessive domestic demand. Inflation is forecast between 2% and 3.5%, as the government implements fiscal reforms. Measures to mitigate inflation include cash transfers and two-tier pricing.
Malaysia's currency, the ringgit, has gained strength due to the nation's solid economic prospects, structural reforms, and initiatives to promote capital inflows. The ringgit's resilience is expected to continue.