KUALA LUMPUR (March 24): Malaysia’s central bank on Monday said that the current level of overnight policy rate remains supportive and in line with its outlook on economic growth and inflation.

“The level is consistent with our current assessment of inflation and growth outlook,” said Bank Negara Malaysia (BNM) governor Datuk Abdul Rasheed Ghaffour. “We are closely monitoring economic conditions, including global tariffs and domestic policy measures.”

Abdul Rasheed was speaking at a news conference following the release of BNM’s flagship publications — the 2024 Annual Report, Economic and Monetary Review, and Financial Stability Review for the Second Half of 2024.

Malaysia has maintained the benchmark interest rate unchanged at 3% since May 2023, drawing comfort from robust economic growth and manageable inflation. However, external risks are intensifying amid a tariff war and geopolitical conflicts.

On Monday, the central bank said monetary policy in 2025 will continue to focus on medium-term prospects of the Malaysian economy amid external uncertainties, and balance the risks to domestic inflation and economic growth.

BNM also maintained its forecast for Malaysia’s economy to expand steadily at 4.5% to 5.5% in 2025, supported by higher household spending, robust investment activity, and moderate export expansion.

“Despite global uncertainties, we have strong economic fundamentals that will provide a cushion against potential external shocks,” Abdul Rasheed said. “The potential for escalation or de-escalation of tariffs and geopolitical conflicts is also factored into our downside and upside risks to this baseline economic growth projection.”

Headline inflation, meanwhile, is expected to pick up to 2.0%-3.5% from 1.8% in 2024.

The forecast has taken into account easing global cost conditions, the absence of excessive demand pressures, and the implementation of domestic measures such as the sales and service tax expansion, minimum wage revision, and the RON95 fuel subsidy rationalisation, Abdul Rasheed added.

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