Malaysia left its key interest rate steady at 3.50 percent on Monday, despite inflation near a 7-year high, calling a halt for now to a series of rate rises as consumers began to feel the pinch.
With economic growth appearing to ease, Bank Negara pointed to few signs of demand-induced price pressures and played down concerns about oil-fuelled inflation after raising rates three times since last November.
"At this stage, limited evidence of second round effects and lack of indications of demand-induced inflationary pressures imply that the monetary policy response can take a pause," the central bank said in a statement.
A Reuters poll of economists last week showed a 50 percent chance that Bank Negara would lift the key rate on Monday.
Prior to Monday's meeting, which was the fourth of eight scheduled for 2006, the monetary policy committee had raised the benchmark overnight rate by a total of 80 basis points at meetings in November, February and April.
Economists saw Monday's rate decision as a pause, and not an end, to the bank's monetary tightening campaign.
At 3.50 percent, Malaysia's benchmark interest rate is among the lowest in Asia. Annual inflation stood at 4.6 percent in April, having hit a 7-year high of 4.8 percent in March. Galloping global energy costs are pushing up consumer prices, with fuel prices rising as the government cuts subsidies to reduce its fiscal deficit.