Malaysian Interest rate remains unchanged.

The Central Bank of Malaysia’s has kept the benchmark interest rate unchanged for the 15th straight Meeting, with the rate stable at 3.5 percent.

The case for a cut in the cost of borrowing is been overturned by the fact that the economy has met inflation targets, which are underpinned by the strength of domestic demand.

The central bank declared that: “the latest indicators show strong domestic demand will provide the support for the Malaysian economy to perform well in the coming months”.

“Bank Negara is balancing global growth concerns with those from inflation,” said.
There are two distinct reasons released by analysis for this prediction.

Matthew Hildebrandt, an economist at JPMorgan Chase Bank in Singapore believes that “until risks from either global growth or inflation move decisively in one direction, I expect Bank Negara to remain sidelined.”

The Bank is predictably balancing the current concerns over global growth with the fears of inflation.

Secondly there is the view that with elections in March and Prime Minister Abdullah Ahmad Badawi, seeking a fresh mandate Wai Ho Leong, an economist at Barclays Capital in Singapore said that: “monetary policy will be focused on maintaining the momentum of domestic demand, supported by higher fiscal expenditure.”

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