Malaysia’s central bank left its key interest rate unchanged as inflation is expected to remain high due to the weaker exchange rate.
Bank Negara Malaysia maintained the Overnight Policy Rate at 3.25 percent as expected. The bank also retained the statutory reserve ratio at 3.50 percent today after cutting it by 50 basis points in January.
The current stance of monetary policy is accommodative and supportive of economic activity, the bank said in a statement.
The bank said it will ensure that there is sufficient liquidity to support the orderly functioning of the money and foreign exchange markets.
BNM forecast the economy to expand at a more moderate pace this year after registering a 5 percent growth in 2015. Private consumption is expected to moderate and investment to continue to be supported by the implementation of infrastructure projects.
The external sector is expected to record a modest improvement and provide additional support to the economy.
For 2016, inflation is expected to be higher compared to 2015, given the adjustments in administered prices and the weaker ringgit exchange rate.
The material has been provided by InstaForex Company – www.instaforex.com