[KUALA LUMPUR] Malaysia’s central bank maintained its benchmark interest rate at 3 per cent on Thursday (May 9), choosing not to follow the recent rate hikes by other South-east Asian countries.
The decision was widely expected – all 30 economists in a recent Reuters poll projected that the central bank would keep the overnight policy rate (OPR) steady at 3 per cent.
While the Philippines, Thailand and, most recently, Indonesia have raised their interest rates to support their tumbling currencies, Malaysia has held the OPR unchanged since its quarter-point hike in May last year.
Bank Negara said the decision was in view of benign inflation and a rosy growth outlook, underpinned by strong domestic expenditure and a recovering global economy.
Most economists predicted the OPR will stay unchanged for the rest of the year, as they observed that the rate hike might not alleviate currency volatility.
HSBC Global Research Asean economist Yun Liu said a rate hike was not a “panacea” for currency volatility. The recent experiences of some Asian central banks suggest that raising rates does not necessarily counteract the strengthening of the US dollar.
Source: https://www.businesstimes.com.sg/international/asean/no-surprise-malaysias-central-bank-holds-key-interest-rate-3