Malaysia's central bank again maintains overnight interest rate at 3%

By Marisa Wong

Madison, Wis., May 9 - The Monetary Policy Committee of Bank Negara Malaysia, Malaysia's central bank, announced that it has kept its overnight policy rate unchanged at 3% given the outlook for inflation and growth.

The committee commented that the global growth momentum has continued to be modest with recovery being uneven and downside risks to global growth prospects remaining.

In Asia, while growth has been affected by the weak external environment, domestic demand continues to support growth. Despite improvements in international financial market conditions, markets remain vulnerable to setbacks and changes in sentiments, the committee said.

With the Malaysian economy, the external sector is affected by global developments, but domestic demand still encourages growth. The bank said that investment activity and private consumption have remained firm.

Going forward, the committee expects the domestic economy to sustain a steady growth.

Inflation remained low at 1.5% in the first quarter, the bank reported.

While inflation is expected to continue to rise during the year, it is projected to remain modest. The committee noted that domestic supply and cost factors are expected to contribute to higher prices and, externally, the risk of weather-related supply disruptions remains and could raise global food prices.

Nevertheless, the committee believes that given modest global growth prospects, pressures from global commodity prices are likely to be contained.

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