Summary Malaysia central bank keeps interest rate unchanged at 3%, as expected www.businesstimes.com.sg
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Malaysia's central bank maintains its benchmark interest rate at 3%, citing moderate economic growth and a weak ringgit, with no further rate hikes expected until 2023 as the economy is projected to grow 3.7% that year.
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Key Points
- Bank Negara Malaysia, the country's central bank, has kept its benchmark interest rate unchanged at 3% on Thursday, March 7th
- This decision was widely anticipated, with all 31 economists surveyed by Reuters predicting that the central bank would maintain the overnight policy rate (OPR) at 3%
- Bank Negara cited the moderate pace of global economic expansion and continued domestic demand supporting the Malaysian economy, along with an improvement in trade activity, as reasons for keeping the interest rate unchanged
- Borrowing costs in Malaysia were last adjusted in May 2023, when the OPR was raised by 25 basis points to the current level of 3%
- Economists expect the central bank to keep rates steady until the end of 2024 or even longer, as they do not anticipate the bank to use rate hikes to defend the weakening ringgit
- The ringgit has been a focus of market attention, having momentarily plunged to RM4.80 against the US dollar on February 21st, its weakest level since the Asian financial crisis 26 years ago
- Bank Negara has stated that the ringgit is undervalued given the country's economic fundamentals and growth prospects, and has stepped up engagement with government-linked companies and investment companies to encourage them to repatriate foreign investment income and convert it into ringgit consistently
Summaries
22 word summary
Malaysia keeps 3% rate, citing moderate growth and ringgit weakness. No further hikes expected until 2024 as economy grows 3.7% in 2023.
54 word summary
Malaysia's central bank kept its benchmark rate at 3%, citing moderate global growth and domestic demand. The bank last raised rates in May 2023 and is expected to maintain this level until 2024, focusing on the weakening ringgit rather than further hikes. The economy grew 3.7% in 2023, with inflation at 1.5% in January.
122 word summary
Malaysia's central bank has kept its benchmark interest rate at 3%, as expected, citing moderate global growth and domestic demand supporting the economy. The current rate level is deemed appropriate for inflation and growth prospects. The central bank last adjusted rates in May 2023, raising the overnight policy rate by 25 basis points. Economists anticipate the central bank will maintain this rate until at least the end of 2024, as it focuses on addressing the weakening ringgit through engagement with companies rather than using rate hikes. The Malaysian economy grew 3.7% in 2023, missing the official 4% target, but the central bank remains optimistic about a recovery driven by exports and domestic spending. Inflation has remained modest at 1.5% year-on-year in January.
348 word summary
Malaysia's central bank, Bank Negara Malaysia, has kept its benchmark interest rate unchanged at 3%, as expected by economists. This decision was made in light of the moderate pace of global economic expansion and continued domestic demand supporting the Malaysian economy, along with an improvement in trade activity.
The central bank stated that the current overnight policy rate (OPR) level remains supportive of the economy and is consistent with the assessment of inflation and growth prospects. Borrowing costs in Malaysia were last adjusted in May 2023, when the OPR was raised by 25 basis points to the current level of 3%. Economists expect the central bank to maintain this rate until the end of 2024 or even longer, as they do not anticipate the bank to use rate hikes to defend the weakening ringgit.
The ringgit has been a focus of market attention, having momentarily plunged to RM4.80 against the US dollar in February, its weakest level since the Asian financial crisis 26 years ago. However, the currency has since regained some strength, trading at RM4.69 against the greenback as of March 7th. To address the currency's weakness, the central bank has stepped up engagement with government-linked companies and investment companies to encourage them to repatriate foreign investment income and convert it into ringgit consistently.
The Malaysian economy grew by 3.7% in 2023, missing the official projection of 4%. However, the central bank remains optimistic that economic growth will improve this year, driven by a recovery in exports and resilient domestic expenditure. Inflation in Malaysia has remained modest, with the year-on-year inflation growth for January staying at 1.5% for the third consecutive month, the lowest level since February 2021.
In conclusion, the Bank Negara Malaysia has maintained its benchmark interest rate at 3%, reflecting its assessment of the current economic conditions and its focus on supporting growth while monitoring inflation and the ringgit's performance. The central bank's coordinated approach to address the currency's weakness is preferred over adjusting monetary policy, and economists expect the central bank to keep rates steady until the end of 2024 or even longer.
522 word summary
Malaysia Central Bank Keeps Interest Rate Unchanged at 3%, as Expected
The Bank Negara Malaysia, the country's central bank, has kept its benchmark interest rate unchanged at 3% on Thursday, March 7th. This decision was widely anticipated, with all 31 economists surveyed by Reuters predicting that the central bank would maintain the overnight policy rate (OPR) at 3%.
In its statement, Bank Negara cited the moderate pace of global economic expansion and continued domestic demand supporting the Malaysian economy, along with an improvement in trade activity, as reasons for keeping the interest rate unchanged. The central bank stated that the current OPR level remains supportive of the economy and is consistent with the assessment of inflation and growth prospects.
Borrowing costs in Malaysia were last adjusted in May 2023, when the OPR was raised by 25 basis points to the current level of 3%. Economists expect the central bank to keep rates steady until the end of 2024 or even longer, as they do not anticipate the bank to use rate hikes to defend the weakening ringgit.
The ringgit has been a focus of market attention, having momentarily plunged to RM4.80 against the US dollar on February 21st, its weakest level since the Asian financial crisis 26 years ago. However, the currency has since regained some strength, trading at RM4.69 against the greenback as of March 7th, around 1% higher than the previous week, but still nearly 3% lower than the RM4.58 level on January 1st this year.
Bank Negara has stated that the ringgit is undervalued given the country's economic fundamentals and growth prospects. To address the currency's weakness, the central bank has stepped up engagement with government-linked companies and investment companies to encourage them to repatriate foreign investment income and convert it into ringgit consistently. This coordinated approach is preferred over adjusting monetary policy to address the currency weakness.
The Malaysian economy grew by 3.7% in 2023, missing the official projection of 4%. However, the central bank remains optimistic that economic growth will improve this year, driven by a recovery in exports and resilient domestic expenditure. Malaysia's export growth turned positive in January, after contracting since March last year, and is expected to continue being supported by stronger global trade as the tech upcycle gains momentum.
Inflation in Malaysia has remained modest, with the year-on-year inflation growth for January staying at 1.5% for the third consecutive month, the lowest level since February 2021. The central bank expects inflation to remain modest in 2024, but cautioned that the outlook continues to be highly dependent on the implementation of domestic policies on subsidies and price controls, as well as on global commodity prices and financial market developments.
In conclusion, the Bank Negara Malaysia has maintained its benchmark interest rate at 3%, in line with market expectations. The central bank's decision reflects its assessment of the current economic conditions, with a focus on supporting growth while monitoring inflation and the ringgit's performance. Economists expect the central bank to keep rates steady until the end of 2024 or even longer, as it prioritizes coordinated efforts to address the currency's weakness over adjusting monetary policy.