KUALA LUMPUR: Malaysia's central bank kept interest rates unchanged at its last monetary policy meeting of the year as it pointed to a "significant improvement" in economic activity in the third quarter but said the outlook remained uncertain due to Covid-19.
Bank Negara Malaysia (BNM) kept its overnight policy rate at a record low of 1.75% as expected by a slim majority of economists in a Reuters poll, holding fire after 125 basis points of rate cuts so far this year.
Malaysia's economy plunged into its first contraction since the 2009 global financial crisis in the second quarter but has since shown signs of recovery with exports rising at their fastest pace in nearly two years in September.
While the central bank expected further improvement in economic activity in 2021, it said targeted measures to contain the pandemic after a resurgence in cases in Malaysia over the past two months could affect the pace of the recovery in the fourth quarter. "Growth for the year 2020 is expected to be within the earlier forecasted range," BNM said referring to its August forecast for a 3.5% to 5.5% economic contraction this year.
"Nevertheless, the pace of recovery will be uneven across sectors," it said, adding that "downside risks to the outlook remain, stemming mainly from ongoing uncertainties surrounding the pandemic globally and domestically."
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