Malaysia's central bank holds key rate at 2.75%, as expected

KUALA LUMPUR, Jan 22 (Reuters) - Malaysia's central bank kept its benchmark interest rate MYINTR=ECI unchanged at its first policy review of the year on Thursday, as expected by economists, amid steady economic growth and modest inflation.

Bank Negara Malaysia kept its overnight policy rate (OPR) at 2.75%, as had been predicted by all 30 economists surveyed in a Reuters poll.

The central bank last lowered its main policy rate in July 2025 in a preemptive move after U.S. President Donald Trump imposed steep tariffs on most trading partners.

Since then, trade-related uncertainty has eased and the tariff rate on Malaysia has been reduced to 19% from 25%, broadly in line with other Asian peers.

"For 2026, while the impact of tariffs could weigh on global growth, the outlook remains resilient, supported by sustained domestic demand, moderating inflation, robust tech investments, and supportive fiscal and monetary policies," BNM said in a statement.

The central bank said the current key interest rate level is "appropriate and supportive of the economy amid price stability".

Malaysia's economy expanded 5.7% in the final quarter of 2025, accelerating from the 5.2% growth recorded in the previous three months, preliminary government data showed last week.

That brought 2025 full-year growth to 4.9%, just below the 5.1% expansion recorded in 2024 and surpassing official projections of between 4% and 4.8%, the data showed.

Official data has not yet been finalised, but BNM said economic growth in 2025 is expected to be at the upper end of the forecast range, adding that the momentum is expected to continue this year, supported by resilient domestic demand.

The government and central bank expects the economy to grow between 4% and 4.5% this year, amid lingering uncertainties arising from the impact of U.S. tariffs.

Inflation has remained moderate with the consumer price index rising 1.6% in December from a year earlier, accelerating slightly from a 1.4% increase the previous month.

Headline and core inflation averaged 1.4% and 2.0%, respectively, in 2025, the central bank said.

"For 2026, headline inflation is expected to remain moderate amid the continued easing in global cost conditions," it said, adding that core inflation this year will remain stable.