KUALA LUMPUR: Malaysia's central bank left its policy rate unchanged for the eighth time in a row on Thursday, saying domestic demand was helping shore up the economy amid a weakening external sector.
The decision was in line with a Reuters poll in which all 18 economists said they expected Bank Negara to keep the rate at 3.0 percent, although there have been concerns about the impact of slowing export growth.
Some of those worries were allayed when the economy grew 5.4 percent in the second quarter compared with a year ago, helped by a jump in private and government investments.
"While the Malaysian economy is affected by these global developments, domestic demand has continued to support economic growth," Bank Negara said in a statement.
Inflation has been tame and the bank said it expected it to remain moderate for the rest of the year. "With some excess capacity in the economy, domestic demand is not expected to result in inflationary conditions," it said.
At last count, headline inflation eased to an annual rate of 1.4 percent in July from 1.6 percent the previous month, having trended lower from levels above 3.0 percent through much of 2011.
Gundy Cahyadi, an economist at OCBC Bank in Singapore, said the central bank will likely keep the benchmark rate unchanged through the year.
"We think the Bank Negara will remain comfortable with where they are now, especially since threat from inflation remains very low."
Within the region, Thailand's central bank left its main interest rates unchanged at 3.0 percent on Wednesday following a similar decision by Indonesia last month even as the global outlook darkens.
Malaysia is due to release its export figures for July on Friday, which are expected to show a further fall in growth. A Reuters poll forecast annual export growth to drop to 3.8 percent, from 5.4 percent in June and 6.7 percent in May, mainly because of lower shipments of commodities.
Comments
Comments are closed.