(Bloomberg) -- Malaysia kept its benchmark interest rate unchanged on Wednesday, a move widely expected as officials bet they can sustain growth momentum and keep inflation under control this year.
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Bank Negara Malaysia left the overnight policy rate at 3% in its first meeting for 2025, as predicted by all 24 analysts in a Bloomberg News survey. Economists expect the central bank to remain on hold throughout the year.
“The monetary policy stance remains supportive of the economy and is consistent with the current assessment of inflation and growth prospects,” BNM said. The Monetary Policy Committee “remains vigilant to ongoing developments to inform the assessment on the domestic inflation and growth outlook.”
The ringgit held 0.6% gains versus the dollar at 4.4517 after the decision.
Malaysia is under no immediate pressure to adjust borrowing costs, even as central banks worldwide pivot to easing. Resilient domestic spending and a growing investment pipeline are set to buffer it from external volatility. At the same time, inflation has remained low, with the government pushing plans to cut subsidies for the nation’s most popular fuel to mid-2025.
“Growth could potentially be higher from greater spillover from the tech upcycle, more robust tourism activity, and faster implementation of investment projects,” BNM said.
Sanjay Mathur, an economist with Australia & New Zealand Banking Group Ltd., said BNM laid out a positive growth narrative for the year. “There is sufficient growth momentum for BNM to remain on hold in a turbulent global environment,” he added.
The central bank said going into this year, inflation is expected to remain manageable amid “the easing global cost conditions and the absence of excessive domestic demand pressures.”
Inflation is expected to average 2% to 3.5% in 2025, the government has said, as it commits to subsidy reforms to strengthen its fiscal position. Measures such as cash transfers for the needy and two-tier pricing are expected to keep inflation under control, according to the government.
The ringgit will continue to get enduring support from Malaysia’s favorable economic prospects, domestic structural reforms and initiatives to encourage flows, according to BNM.