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Malaysia keeps interest rates on hold

by ChemOrbis Editorial Team - content@chemorbis.com
  • 20/05/2016 (14:57)
Bank Negara Malaysia kept its overnight policy rate (OPR), on which commercial banks base their deposit and lending rates, unchanged at 3.25%, defying some analysts’ expectations that the bank would move to cut interest rates due to the slowing economy, according to media reports. The central bank last implied a 25 basis point hike on its benchmark rate in July 2014.

The Malaysian economy grew 4.2% in the first quarter compared with the same quarter of last year. Meanwhile, policymakers are confident that the economy will be able to expand by 4% to 4.5% this year while still expecting the first half to show a slower pace of growth compared with the same period of 2015. The economy grew by 5% last year.

Economic activity is expected to improve with domestic demand, which remains the main driver of growth, while private consumption is also expected to expand further owing to higher wages and employment. Infrastructure projects and capital spending in the manufacturing and services sectors will continue to support investment activities, though private investments declined due to a regression in the oil, gas and plantation industries.
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