Malaysia Central Bank Cuts Policy Rate For First Time Since 2020

(RTTNews) - Malaysia's central bank lowered its key interest rate for the first time in five years on Wednesday to underpin economic growth amid the ongoing trade tariff uncertainty.

The Monetary Policy Committee of Bank Negara Malaysia decided to reduce the Overnight Policy Rate by 25 basis points to 2.75 percent. The ceiling and floor rates of the corridor of the OPR were correspondingly reduced to 3.0 percent and 2.5 percent, respectively.

This was the first reduction in the policy rate since July 2020.

"The balance of risks to the growth outlook remains tilted to the downside, stemming mainly from a slower global trade, weaker sentiment, as well as lower-than-expected commodity production," the bank said in a statement.

The MPC said the reduction in the OPR is a pre-emptive measure aimed at preserving steady economic growth path amid moderate inflation prospects.

Inflation is expected to remain moderate this year amid contained global cost conditions and the absence of excessive domestic demand pressures. The overall impact of the announced and upcoming domestic policy reforms on inflation is forecast to be contained.

Although the domestic economy is on a strong footing, uncertainties surrounding external developments could affect growth prospects, the bank said.

In the first quarter, Malaysia's economic growth eased to 4.4 percent from 4.9 percent in the prior quarter. The International Monetary Fund forecast the Asian country's economy to grow 4.1 percent this year.