Malaysia extends rate pause as inflation cools, growth slows

BLOOMBERG

Malaysia left its monetary settings unchanged for a second straight meeting, as the central bank opted to weigh the impact of previous interest-rate increases on economic activity amid a challenging global  outlook.
Bank Negara Malaysia (BNM) held its overnight policy rate at 2.75%, a decision seen by 11 of 20 economists in a Bloomberg survey, with the rest expecting a 25 basis-point increase.
At this level, the rate remains accommodative and supportive of economic growth, the central bank said in a statement. BNM “will continue to calibrate the monetary policy settings that balance the risks to domestic inflation and sustainable growth.”
The ringgit was steady against the dollar, erasing earlier gains of around 0.1% after the decision, while the main equities index held losses of 0.2%.
Malaysia was the first in the region to pause its monetary tightening this year as authorities opted to see the impact of past increases on demand in the economy. While it was joined by Indonesia in standing pat, the rate outlook for the region looks poised to change in the wake of an aggressive tightening campaign by the US Federal Reserve to tame inflation.
BNM said while the decision of some central banks to continue raising interest rates will pose headwinds to the global growth outlook, Malaysia’s economy will remain driven by domestic demand. BNM said it expects headline and core inflation to moderate over the course of 2023, but still remain elevated.