KUALA LUMPUR, March 6 (Reuters) - Malaysia’s central bank held its key interest rate steady at 3.0 percent on Thursday, as expected, reiterating that a rise in inflation was expected to be contained as domestic spending cools.
“Going forward, inflation is expected to be affected by higher domestic costs,” Bank Negara Malaysia’s monetary policy committee said in a statement.
“The subdued external price pressures and moderate domestic demand conditions will, to some extent, contain the impact of these cost factors on the underlying inflation.”
(Full text of central bank’s statement: )
The annual inflation rate accelerated to 3.4 percent in January, a 27-month high, reflecting a hike in prices of food, transport and electricity.
Malaysia’s policy rate has been steady since mid-2011, and all 17 economists in a Reuters poll expected the central bank to keep it unchanged on Thursday. Most analysts expect no change until the second half of 2014.
Malaysia’s economy beat expectations and picked up speed in the last quarter of 2013, with exports rebounding as a gradual recovery in the global economy spurred more shipments of electronics and commodities.
Most economists expect Malaysia’s economy to grow at a robust 5 percent or more this year, following an expected expansion of 4.5-5.0 percent for full-year 2013, helped by a brighter global economy that should aid its vital export sector. (Reporting by Hawa Semasaba; Editing by Stuart Grudgings)