KUALA LUMPUR • Malaysia's central bank yesterday cut its benchmark interest rate for the first time since July 2016, seeking to support the economy as global risks mount.
Bank Negara Malaysia reduced the overnight policy rate by a quarter percentage point to 3 per cent, as predicted by 14 of 23 economists surveyed by Bloomberg. The rest forecast no change.
Malaysian policymakers are bracing themselves for slower growth as exports take a knock from weaker global demand and rising trade tensions.
The central bank is forecasting expansion of 4.3 per cent to 4.8 per cent this year, lower than the government's projection of 4.9 per cent.
The bank said: "There are downside risks to growth from heightened uncertainties in the global and domestic environment, trade tensions and extended weakness in commodity-related sectors."
Asian central banks are moving to more dovish stances after the US Federal Reserve put the brakes on rate hikes and growth outlooks soured.
Malaysia is the second Asian nation after India to lower interest rates this year.
Given the tightening in financial conditions, the rate cut is "intended to preserve the degree of monetary accommodativeness", the central bank said.
"This is consistent with the monetary policy stance of supporting a steady growth path amid price stability."