Bank Negara Malaysia (BNM) opted to keep its benchmark interest rate steady at 3.00%, a decision that was widely anticipated by economists surveyed by Reuters. The central bank's monetary policy stance is aimed at providing support to the economy, aligning with its assessment of inflation and growth outlooks. Looking ahead, BNM emphasized its commitment to closely monitoring developments that could influence domestic inflation and growth trajectories as the country progresses into 2025.
The Malaysian economy exhibited a 5.9% growth in the second quarter of the year, marking the fastest pace in 18 months. This growth was primarily driven by increased household spending, exports, investments, and tourism activities. BNM highlighted that various economic indicators suggest a sustained robust economic activity supported by resilient domestic expenditure and a rise in export activities. Additionally, BNM projected that headline and core inflation rates would remain within their expected ranges, not surpassing 3% for the year.
However, BNM warned about potential inflation risks stemming from government policy measures, especially following the removal of certain diesel subsidies in June. The central bank indicated that the inflation outlook is contingent on factors such as the spillover effects of domestic policy changes on subsidies and price controls. It also mentioned that global commodity prices and financial market developments could impact inflation trends. Despite these cautions, the Malaysian ringgit did not experience significant fluctuations following the central bank's decision to maintain the interest rate.