BANK NEGARA KEEPS KEY RATE AT 3.25pc

KUALA LUMPUR: Bank Negara Malaysia has maintained the key interest rate at 3.25 per cent, in anticipation of stronger domestic demand.

The central bank said Malaysia’s strong growth performance in the fourth quarter of last year continued to be anchored by private sector spending.

“Looking ahead, growth prospects will be sustained by the positive global growth outlook and spillovers from the external sector to the domestic economy.

“Domestic demand will remain the key driver of growth, underpinned by favourable income and labour market conditions, spending on new and ongoing infrastructure projects and sustained capital investment by firms in the manufacturing and services sectors.

“With additional impetus from the external sector, growth is expected to remain strong in 2018,” it said in a statement yesterday.

“Inflation is projected to average lower in 2018, on expectations of a smaller effect from global cost factors,” it added.

Bank Negara said a stronger ringgit exchange rate this year would mitigate import costs.

Global energy and commodity prices are expected to trend higher this year, but at a more moderate pace relative to the previous year.

“However, the trajectory of headline inflation will be dependent on future global oil prices which remain highly uncertain,” it said.

Bank Negara said underlying inflation, as measured by core inflation, was set to moderate due to higher labour productivity and ongoing investments for capacity expansion.

Looking ahead, growth prospects will be sustained by the positive global growth outlook and spillovers from the external sector to the domestic economy. BANK NEGARA MALAYSIA