Malaysia Central Bank Raises Key Rate By 25 Bps

(RTTNews) - Malaysia's central bank raised its key interest rate by a quarter-point for the third consecutive time to combat high inflation.

The Monetary Policy Committee of Bank Negara Malaysia, on Thursday, decided to increase the Overnight Policy Rate by 25 basis points to 2.50 percent.

The ceiling and floor rates of the corridor of the OPR were correspondingly increased to 2.75 percent and 2.25 percent, respectively.

This was the third consecutive rate hike in the current tightening cycle that started in May 2022.

At the current level, the monetary policy stance continues to remain accommodative and supportive of economic growth. The central bank said it is not on any pre-set course.

Further, the bank said any adjustments to the monetary policy settings going forward would be done in a measured and gradual manner.

The central bank statement suggests that the tightening cycle is unlikely to be aggressive, economists at Capital Economics, said. Overall, the central bank is likely to hike rates by a further 25 basis points this year, with one more 25 basis point hike in early 2023.

The central bank expects inflation to peak in the third quarter before slowing due to dissipating base effects and in line with the expected easing of global commodity prices.

Economic growth is forecast to continue underpinned by higher private consumption. Going forward, policymakers observed that downside risks to the domestic economy continue to stem from a weaker-than-expected global growth, further escalation of geopolitical conflicts, and worsening supply chain disruptions.