Malaysia central bank holds policy rate as expected, highlights risks to growth
KUALA LUMPUR (REUTERS) - Malaysia's central bank left its key interest rate unchanged at 3 per cent on Thursday as expected, but warned that the outlook for growth and inflation has become more uncertain.
Bank Negara Malaysia's monetary policy committee said inflation remained benign at 1.7 per cent in the first seven months this year, but would likely increase in the coming months, partly due a cut this week in fuel subsidies.
"The increase in inflation, however, is from a low level and will be mitigated by a stable external price environment, expansion in domestic capacity and moderate domestic demand pressures," the central bank said in a statement.
Malaysia's economic growth will continue to be underpinned by domestic activity, helped in part by large infrastructure projects, the bank said, but added that risks in the global economy and international financial markets could dent prospects.