| KUALA LUMPUR, July 10
KUALA LUMPUR, July 10 Malaysia's central bank is
expected to raise its policy interest rate for the first time in
more than three years to rein in spending that has ratcheted up
consumer debt and inflation.
Economists expect Bank Negara to favour tighter policy at
its rate review on Thursday as growth has been strong and
exports are improving.
"Strong growth would help mitigate the impact of an interest
rate hike on slower private consumption," said Michael Wan, a
Credit Suisse economist.
"Higher interest rates would serve as a deterrent to new
borrowers and moderate household debt," Wan added.
A majority of economists in a Reuters poll forecast a
25-basis-point increase to 3.25 percent. The
central bank has held rates steady since mid-2011.
At its meeting in May, Bank Negara signalled that key rates
"may need to be adjusted" to tackle "financial imbalances".
Household debt has risen by more than 25 percentage points
in four years, standing at a hefty 86.8 percent of GDP in 2013 -
the second highest in Asia after South Korea's 91.1 percent.
Malaysia's annual economic growth picked up in the first
quarter to 6.2 percent, its fastest in more than a year, while
exports grew an average of 13.6 percent from January to May this
year helped by improved demand for its technology products and
Industrial output is also expected to be solid with a
Reuters poll predicting growth in May picked up to 4.4 percent
from a year earlier. Factory output data is due at 0401 GMT on
The central bank's rate decision is due at 1000 GMT.
(Editing by Jacqueline Wong)