Malaysia's central bank kept its benchmark interest rate steady at 3 percent on Thursday, as expected, signalling it remains comfortable for now with the country's rising inflation rate. Bank Negara Malaysia has kept its overnight policy rate on hold since mid-2011.
Malaysia's annual inflation rate quickened to 3.4 percent in January, the highest level in more than two years, reflecting increases in the price of food, transport and electricity. "Inflation has been gradually rising due to disruptions in supply following adverse weather conditions and increases in domestic costs,," the central bank said in a statement.
In future, it said, inflation is expected to be affected by higher domestic costs. However, "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." BNM said it will "continue to monitor for signs of destabilising risks of financial imbalances."