Malaysia Central Bank Holds Key Rate at 3%, Warns of Economic Risks

Malaysia's central bank, Bank Negara Malaysia, kept its benchmark interest rate at 3% amid concerns over a global trade war and a likely slowdown in economic growth, in line with expectations from most economists. Despite inflation dropping to a four-year low and first-quarter growth moderating, the central bank signaled that the balance of risks to growth remains tilted to the downside due to ongoing trade tensions and uncertainties. The bank indicated it may need to lower its economic growth forecast because of new US tariffs, and economists now largely expect a rate cut later in the year to support growth. While other Asian central banks have already cut rates several times to bolster their economies, Malaysia has so far held steady, with the majority of analysts predicting the overnight policy rate will remain unchanged until the final quarter of the year. The central bank also projects inflation to stay manageable in 2025, given moderate global costs and the absence of major domestic demand pressures.