KUALA LUMPUR: Malaysia's central bank left its overnight policy rate unchanged on Thursday, as widely expected, saying that capital spending and domestic demand will support the economy.
Bank Negara Malaysia (BNM) left its key rate unchanged at 3.25 percent, reiterating that it remains accommodative to growth.
"Investment activity is expected to be led by capital spending in the export-oriented industries, the services sector and for infrastructure projects," it said in a statement.
"These investments will cushion the impact of the lower oil and gas-related investment activity."
All 16 economists in a Reuters poll had expected no change as policymakers saw limited downside risk for now. The Southeast Asian net oil exporter's reserves had slumped to 4-1/2-year lows due to a slide in global oil prices since last year, hitting the ringgit and putting Malaysia at risk of capital outflows.
Its shrinking current account surplus and pressures on the fiscal deficit have also raised the possibility of a sovereign downgrade. But the economic outlook is turning brighter as exports are showing signs of bottoming out due to recovering demand in key markets.
The central bank said the global economy was "expected to improve although at a moderate pace".
It added that domestic consumption would remain a key driver of growth, despite the implementation of a 6 percent consumer tax in April.
The ringgit closed local trade down 0.6 percent at 3.5925 per dollar before the decision. The currency has lost 2.7 percent on the dollar so far this year - the second-worst performing Asian currency in 2015.
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