January 29, 2014 / 10:11 AM / 3 years ago

Malaysia c.bank holds interest rate steady as expected

2 Min Read

KUALA LUMPUR, Jan 29 (Reuters) - Malaysia's central bank kept its key interest rate unchanged at 3.00 percent on Wednesday, as expected, reiterating that rising inflation is expected to be tempered by an easing of domestic demand this year.

"Inflation has been gradually rising due to disruptions in supply following adverse weather conditions and higher domestic costs," Bank Negara Malaysia's monetary policy committee said in a statement.

"Going forward, inflation is expected to average higher largely due to domestic cost factors," it added.

The central bank added that subdued external price pressures and moderate domestic demand conditions, would help contain the spike in inflation.

Annual inflation in Malaysia quickened to 3.2 percent in December, the fastest pace in more than two years, as prices of food and transport in the Southeast Asian country climbed.

Malaysia's policy rate has been left steady since mid-2011. All 12 economists in a Reuters poll expected a hold on Wednesday, while most analysts expect no rate change until the second half of 2014.

For the full central bank monetary policy statement, click on

For a graphic of Malaysia's inflation and overnight policy rate, please see: link.reuters.com/jem28s (Reporting by Anuradha Raghu; Editing by Stuart Grudgings)

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