Malaysia holds interest rates steady
by ChemOrbis Editorial Team - content@chemorbis.com
Malaysia’s central bank kept interest rates unchanged for an eighth month in a row, in line with expectations, according to market sources. The bank held its overnight lending rate stable at 3.25%. Following the rate decision, the Malaysian ringgit weakened 0.7% to 4.2965 against the US dollar.
The bank also pointed out that some downside risks still remain in place for the country. The slowing Chinese economy, which is one of Malaysia’s main trade partners, dragged down the country’s export orders while the application of a new consumption tax also caused a decrease in private spending. In addition, the ringgit has seen the steepest declines of any Asian currency against the dollar this year and lower crude oil prices are also weighing down Malaysia’s economy as the country is the only major net oil exporter in the ASEAN region.
According to the bank, Malaysia’s economy will grow as much as 5.5% this year while for 2016, the bank expects the economy to expand between 4-5%. Meanwhile, inflation is expected to increase 2-3% next year, compared with estimates of 2-2.5% in 2015. In the second quarter of this year, the Malaysian economy grew at the slowest pace in almost two years, posting a growth rate of 4.9% from a year earlier.
The bank also pointed out that some downside risks still remain in place for the country. The slowing Chinese economy, which is one of Malaysia’s main trade partners, dragged down the country’s export orders while the application of a new consumption tax also caused a decrease in private spending. In addition, the ringgit has seen the steepest declines of any Asian currency against the dollar this year and lower crude oil prices are also weighing down Malaysia’s economy as the country is the only major net oil exporter in the ASEAN region.
According to the bank, Malaysia’s economy will grow as much as 5.5% this year while for 2016, the bank expects the economy to expand between 4-5%. Meanwhile, inflation is expected to increase 2-3% next year, compared with estimates of 2-2.5% in 2015. In the second quarter of this year, the Malaysian economy grew at the slowest pace in almost two years, posting a growth rate of 4.9% from a year earlier.
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