KUALA LUMPUR, Jan 24 (Reuters): Malaysia's central bank kept its benchmark interest rate unchanged for the fourth straight meeting on Wednesday, seeking to support economic growth ahead of an expected pickup in inflation following planned subsidy changes.
Bank Negara Malaysia (BNM) maintained its overnight policy rate (OPR) at 3.00 per cent at its first meeting of the year on Wednesday, in line with market expectations that it will hold rates steady until at least the end of 2025.
BNM said in a statement that advance estimates indicated Malaysia's economy expanded in line with expectations last year, and growth is expected to improve in 2024, supported by a recovery in exports and resilient domestic expenditure.
"The growth outlook remains subject to downside risks stemming from weaker-than-expected external demand and larger declines in commodity production," the central bank said in a statement on Wednesday.
Malaysia's economy is expected to grow 3.8 per cent in 2023, the statistics department said in preliminary estimates last week. The estimate was short of the government's initial projection of a 4 per cent expansion, with exports remaining sluggish.
The government and BNM expect economic growth of 4 per cent-5 per cent this year.
Inflation in Malaysia has eased in recent months, with headline and core inflation averaging 2.5 per cent and 3.0 per cent in the fourth quarter, BNM said.
The consumer price index rose 1.5 per cent in December, remaining at its lowest pace since March 2021, data showed this week. Inflation was expected to remain modest in 2024, BNM said.
However, the government's intention to review price controls and fuel subsidies this year "will affect the inflation outlook and demand conditions", it said.
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