Bank Negara Malaysia maintains policy rate, anticipates steady economy in 2025 By Investing.com

Investing.com – Bank Negara Malaysia (BNM) left its key policy rate unchanged at 3.0%, in line with expectations of 30 economists who had predicted no rate change in Malaysia in May 2023. After a recent rise of 25 basis points.

Capital Economics, a leading economic research firm, suggests that while other central banks may cut their interest rates in the coming months, BNM is expected to maintain its current interest rate throughout the year.

Underlying the decision is the strength of Malaysia’s economy, which showed steady growth of 4.8% year-on-year in the fourth quarter, according to preliminary data released last week.

BNM expressed confidence in the continued strength of the economy in 2025, driven mainly by resilient domestic spending, it said in a statement today, pointing to a positive outlook for the coming year.

However, the future of inflation in Malaysia is less certain, with the headline rate at a modest 1.7% year-on-year in December, with inflation forecast to pick up later in the year thanks to long-term planned cuts in petrol prices.

These changes, announced in the budget, aim to improve public finances. As a result, the prime rate is expected to rise above 3% next year.

Inflation above 3% per annum may be outside the central bank’s comfort zone as BNM does not have an explicit inflation target.BNM said in its statement today that future inflation will be influenced by domestic policy measures.

Although some analysts predict interest rate cuts for 2025, most, including Capital Economics, do not foresee a change in the policy rate this year.

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