Malaysia keeps rate on hold amid low inflation

Bloomberg

Malaysia’s central bank kept its benchmark interest rate unchanged on Tuesday, saying inflation is likely to remain low after the economy slipped into deflation in January.
The central bank kept its overnight policy rate at 3.25 percent, in line with the forecasts of all 22 economists surveyed by Bloomberg. Bank Negara Malaysia has left the rate on hold since raising it by 25 basis points in January 2018.
“In the immediate term, inflation is expected to remain low mainly due to policy measures,” the central bank said. “Recognizing that there are downside risks in the economic and financial environment, the monetary policy committee will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation.”
The central bank now expects inflation to stay low in the immediate term and be “broadly stable” in 2019 as compared to last year, after previously saying that it would trend higher. Consumer prices dropped 0.7 percent in January from a year earlier — the first decline since the aftermath of the global financial crisis in 2009 — as fuel costs fell.
Analysts at Deutsche Bank AG and Nomura Holdings Inc. predict lower interest rates this year, while the majority in a Bloomberg survey still see policy makers staying on hold through 2019. Economists expect the government to miss its 4.9 percent growth goal in 2019, predicting 4.5 percent instead, as global risks mount.