As expected, Bank Negara raises policy rate to 3.25%

Reuters

Malaysia’s central bank on Thursday raised its key interest rate for the first time in three and a half years, at a time inflation has crept up and growth is robust.

Bank Negara Malaysia (BNM) hiked its overnight policy rate by 25 basis points to 3.25 percent.

The central bank said its monetary policy committee “decided to normalise the degree of monetary accomodation” as the economy remains firmly on a steady growth path.

A slim majority of economists in a Reuters poll – six out of 10 – had predicted the hike.

The last time BNM changed its key rate was in July 2016, shortly after Britain’s Brexit vote, when it made a 25 basis point cut.

Until Thursday, the last BNM hike was in July 2014, when the key rate was increased to 3.25 percent.