Bank Negara Malaysia Holds Rates at 3% Amid Trade Uncertainties

Malaysia's central bank, Bank Negara Malaysia, decided to keep its overnight policy rate unchanged at 3% during its monetary policy meeting on Thursday. This decision was in line with the expectations of 20 out of 25 economists surveyed, while the remaining five had predicted a 25 basis point cut. The central bank cited the potential risks to economic growth posed by U.S. President Trump's tariffs as a reason for maintaining the current policy rate.

The central bank stated that the current policy rate is appropriate given the assessment of inflation and growth prospects. It also emphasized that under conditions of price stability, the monetary policy stance will continue to be accommodative to support sustainable economic growth. The bank's decision to hold rates reflects its cautious approach to managing the economy in the face of external uncertainties, particularly the ongoing trade tensions between the United States and China.

The central bank's statement highlighted the need to preserve policy space to address potential downside risks to the economy. By keeping rates on hold, the central bank retains the flexibility to respond to any adverse developments in the global trade environment or domestic economic conditions. This decision aligns with the bank's commitment to maintaining price stability while supporting economic growth.

The central bank's decision comes at a time when global economic uncertainties are on the rise, with trade tensions and geopolitical risks posing significant challenges to economic growth. The bank's cautious approach to monetary policy reflects its commitment to ensuring the stability and resilience of the Malaysian economy in the face of these challenges. By maintaining the current policy rate, the central bank is signaling its readiness to act if necessary to support economic growth and maintain price stability.