KUALA LUMPUR: Bank Negara Malaysia has announced a surprise cut in borrowing costs today.
The key benchmark interest rate or the Overnight Policy Rate has been lowered to 3.0 per cent from 3.25 per cent.
The monetary policy committee, chaired by BNM governor Datuk Muhammad Ibrahim, has warned that the slow global growth pace and uncertainties in the global environment could weigh on Malaysia's growth prospects.
For Malaysia, domestic demand continues to be the main driver of growth while private consumption will be supported by growth in income and employment, and measures implemented by the government.
"Overall domestic financial conditions have remained stable since the previous MPC meeting with financial markets continuing to function in an orderly manner. The risks of destabilising financial imbalances have receded," it said.
Inflation is projected to be lower at 2 to 3 per cent in 2016, compared to an earlier projection of 2.5 – 3.5 per cent, and continue to remain stable in 2017.
The central bank said the ceiling and floor rates of the corridor for the OPR are correspondingly reduced to 3.25 percent and 2.75 percent respectively.