All 11 economists polled by Reuters expected BNM to keep its overnight policy rate unchanged, which gives it room for another cut - there was one in May - if growth falters later this year.

"While the prospects of monetary easing in the major economies have somewhat eased global financial conditions, heightened policy uncertainty could lead to excessive financial market volatility," BNM said.

The current policy stance remains "accommodative" to economic activity, it added.

BNM's 25 basis point (bp) cut in May, Malaysia's first since July 2016, came amid signs of slowing global growth, partly due to the United States-China trade war.

The cut reflected changes in global interest rates and the increasingly dovish stance of many central banks in 2019's first half.

Now, many economists doubt Southeast Asian central banks will make cuts until the Federal Reserve reduces U.S. interest rates - and some doubts the Fed will cut at the end of July have arisen due to a strong U.S. June jobs report.

Julia Goh, a Malaysia-based economist with UOB Bank, expects Malaysia's benchmark to not change again this year as BNM has "already cut ahead of the Fed, so from that point of view they are ahead of the curve... they can afford to wait and see how the data and events pan out."

But Capital Economics expects a second 25 bps cut this year, most likely at BNM's next meeting, on Sept. 12.

Euben Paracuelles of Nomura agrees there could be a cut in September.

"A lot of things could go wrong and weigh on growth... if risks of weakening growth rise, they would have room to ease again."

GROWTH FORECAST MAINTAINED

BNM said it is keeping Malaysia's baseline growth projection for this year of 4.3-4.8%.

"While the external sector performance is likely to be weighed down by slower global growth and trade tensions, economic growth will be supported by domestic demand," it said.

To Paracuelles, external risks will continue to be a major factor in BNM's stance, as Malaysia's domestic economy tends to be directly affected by the performance of its exports.

In May, exports rose only 2.5% from a year earlier, less than expected, thanks to a decline in shipments of manufactured goods to major trade partner China.

Meanwhile, inflation remains benign, in May remaining at 0.2% for the third month. Inflation has been mild since an unpopular consumption tax was scrapped in June 2018.

BNM said it expects headline inflation to rise in the second half as changes in the government's consumption tax policy lapse, though the trajectory will depend on global oil prices and policy measures to manage retail fuel prices.

The ringgit, one of the worst performers in the region this year, has weakened about 0.3% against the dollar this year.