The central bank held the overnight policy rate at 3 percent, it said in a statement in Kuala Lumpur today. The decision was predicted by 18 of 20 economists surveyed by Bloomberg News, while two forecast a 25 basis-point increase.
Higher fuel prices and electricity tariffs have driven inflation in Southeast Asia’s third-biggest economy to the fastest in more than two years. While Governor Zeti Akhtar Aziz signaled confidence last month that price increases will remain contained and policy makers don’t see second-round effects emerging, traders are pricing in higher rates in the next year.
“The latest comments from Governor Zeti seem to suggest they are not yet at a point of considering rate hikes, particularly on their assessment on inflation expectations,” Euben Paracuelles, a Singapore-based economist at Nomura Holdings Inc., said before the decision. “The next move by BNM is still more likely a hike, although the timing has become less certain.”
Consumer prices rose 3.5 percent in March from a year earlier, matching the fastest pace since June 2011. Inflation will probably accelerate somewhat next year as a result of tax increases and then moderate to about 3 percent in 2016, Zeti said in April.
Malaysian interest-rate swaps are pricing in a half percentage point increase in borrowing costs in the next 12 months, compared with 25 basis points six months ago, data compiled by Bloomberg show.
The ringgit gained 0.4 percent to close at 3.2380 per dollar in Kuala Lumpur today and has appreciated 2.8 percent in the last three months, according to data compiled by Bloomberg.
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