Falling short of expectations, Bank Negara Malaysia (BNM) made a surprise decision by raising the overnight policy rate (OPR) by 25 basis points to 3.00%.
This raises the ceiling rate at 3.25% and the floor rate at 2.75%.
Check the details of the follow-up statement from BNM following the decision.
The global economy continues to be plagued by high cost pressures and higher interest rates.
Global core inflation remains above historical averages, although core inflation continues to moderate from record highs.
For most central banks, the monetary policy stance is likely to remain tight.
Further prospects depend on downside risks mainly from geopolitics, inflation and further pressures in the banking sector.
For the Malaysian economy, development will focus on further growth in economic activity in the first quarter of 2023..
Growth will be driven by domestic demand, although exports are expected to moderate.
Household spending remains resilient, supported by an improved labor market.
The increased risk will be supported by the implementation of projects from the new 2023 Budget.
Downside risk will be influenced by growth and global financial market conditions.
The country's main and core inflation is expected to moderate throughout 2023, but may continue to increase due to strong demand factors.
As a result of domestic growth prospects that remain resilient, BNM considers it appropriate to further normalize the current level of monetary policy by raising interest rates by 25 basis points.
At current levels, the stance of monetary policy is slightly accommodative and remains supportive of the economy.
However, the Monetary Policy Committee (MPC) will continue to ensure that the central bank's stance remains consistent with domestic inflation and growth prospects.
