Malaysia central bank holds policy rate steady, as expected

[KUALA LUMPUR] Malaysia's central bank kept its key interest rate unchanged at 3.25 per cent on Thursday, as expected, saying inflation is only expected to trend higher after the first quarter of 2015.

"While the monthly headline inflation would be subjected to the volatility in global oil prices, underlying inflation is expected to remain contained amid the stable domestic demand conditions," Bank Negara Malaysia's (BNM) monetary policy committee said in a statement.

A Reuters poll of 16 economists unanimously predicted that Bank Negara would keep its overnight policy rate steady following a weakened ringgit and a drop in global oil prices.

Malaysia last raised its policy rate in July 2014, after keeping it on hold for three years. It increased interest rates when inflation was high and the central bank sought to tighten lending to manage rising household debt.

REUTERS