Malaysia Central Bank Steadies Interest Rate at 3% to Curb Inflation

Bank Negara Malaysia (BNM), Malaysia’s central bank, has kept its benchmark interest rate steady at 3.00% during its final policy meeting of 2024, in line with market expectations. This interest rate stability has been maintained since May 2023, supported by positive economic growth and stable inflation.

BNM cited resilient domestic expenditure and increased export activity as key drivers of economic activity. Inflation remains modest, with headline and core inflation averaging 1.8% year-to-date. Looking ahead, BNM expects manageable inflation in 2025, aided by easing global costs and the absence of significant domestic demand pressures. However, the bank cautioned that the inflation outlook may be influenced by upcoming government policies.

This year, Malaysia’s government reduced broad subsidies on diesel, electricity, and chicken, with plans to extend subsidy cuts to other widely used transport fuels by mid-2025. In its latest budget, the government also revised its 2024 economic growth forecast upwards to a range of 4.8% to 5.3%, an increase from the previous range of 4% to 5%.

According to advance estimates, Malaysia’s third-quarter GDP growth was 5.3%, showing a slight deceleration from 5.9% in the second quarter, yet supporting a positive economic trajectory into the new year.