Bank Negara keeps benchmark rate unchanged at sixth meeting

  • Business
  • Saturday, 27 Jan 2007

KUALA LUMPUR: Bank Negara kept its benchmark interest rate unchanged for a sixth straight meeting to sustain “steady” growth amid concerns that a global economic slowdown may hurt the nation's exports.  

The overnight policy rate remained unchanged at 3.5%, the central bank said in a statement yesterday after its first monetary policy meeting for the year.  

Asian central banks from Malaysia to South Korea are keeping borrowing costs on hold or cutting them amid prospects of slowing demand for the region's exports.  

“There are no domestic catalysts to change the overnight policy rate,” Aseambankers Malaysia Bhd economist Saifuddin Morat said. 

“Inflation is below 3.5% and the economy is still growing above 5.5%. Externally, most countries have ceased their interest rate hike cycle and some have even cut.”  

Malaysia's inflation will ease this year and the central bank may cut rates in the second half if economic growth and overseas demand for its exports weaken, Saifuddin said.  

“The Malaysian economy is expected to maintain a steady growth path in 2007,” the central bank said. “Some weakening in the international economic conditions could affect export growth.”  

Still, private and public spending will help sustain growth, it added. 

“Inflation is expected to be contained in 2007 due to lower import prices and expansion of domestic capacity,” the central bank said, adding that cost-driven price pressures were also likely to be moderate. – Bloomberg  

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