May 10, 2018 / 7:00 AM / a year ago

Malaysia's holds policy rate at 3.25 pct

KUALA LUMPUR, May 10 (Reuters) - Malaysia’s central bank left its key interest rate unchanged at 3.25 percent on Thursday, as expected, as core inflation remains contained.

The Bank Negara Malaysia (BNM) decision came at a policy meeting scheduled before the government called a general election on May 9. An alliance of opposition parties spearheaded by former premier Mahathir Mohamad won a stunning victory.

With the election result, there will be a change in government for the first time in Malaysia since independence in 1957.

All 11 economists polled by Reuters had expected BNM to hold its overnight policy rate on Thursday.

“At the current level of the OPR, the degree of monetary accommodativeness is consistent with the policy stance to ensure that the domestic economy continues on a steady growth path amid lower inflation,” BNM said in a statement.

The central bank raised its key rate in January, when inflation was higher, to “normalise” policy ahead of the general election.

The January hike was BNM’s first since July 2014, and the first change since July 2016, when there was a 25 basis point cut.

The central bank said it expects a stronger ringgit exchange rate this year will mitigate import costs.

“However, the trajectory of headline inflation will be dependent on future global oil prices which remain highly uncertain,” BNM said. (Reporting by Joseph Sipalan; Editing by Richard Borsuk)

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