LONDON, Sept 10 — The deputy governor of Malaysia’s central bank anticipates interest rates will hold steady for the remainder of the year.

Speaking to financial wire Bloomberg here, Bank Negara Malaysia’s (BNM) Adnan Zaylani Mohamad Zahid said Malaysia’s economy is expected to grow around 5 per cent this year with inflation remaining below 3 per cent.

"There’s no real compelling reason or any pressure on interest rates to move in either direction at this stage, though we have to be open to consider the risks going forward,” he was quoted as saying.

According to Bloomberg, this stable approach distinguishes Malaysia from other South-east Asian nations as global central banks, including the US Federal Reserve, lean towards easing.

BNM last adjusted its overnight policy rate in May 2023, concluding a yearlong tightening cycle.

In contrast, the Philippines recently cut rates from a 17-year high, and Indonesia and Thailand are considering easing measures.

Looking ahead, Adnan notes that Malaysia’s rate path for next year remains uncertain due to various factors, especially inflation.

The deputy governor said BNM remains cautious about easing too soon due to potential price pressures linked to possible petrol subsidy cuts.

Prime Minister Datuk Seri Anwar Ibrahim’s plan to end petrol subsidies could impact inflation, though a timeline for this change is yet to be confirmed.

The government is still projected to meet its fiscal deficit targets of 4.3 per cent of GDP for this year and around 3 to 3.5 per cent for 2025.

Adnan finds reassurance in these fiscal targets, which are expected to strengthen Malaysia’s economic fundamentals.

The ringgit has strengthened by 0.3 per cent in early trading, outperforming other emerging-market currencies.

The currency has rebounded from a 26-year low against the dollar in February, benefiting from government and central bank efforts to encourage income repatriation.

Malaysia is well-positioned to handle potential external shocks, such as a slowdown in China or global trade tensions, thanks to its diverse economy.

Bloomberg reported that Adnan is in London to attend a forum promoting Islamic finance and the growth of Malaysia’s sukuk market.

BNM aims to attract investment in the US$260 billion Islamic bond market by emphasising its green and sustainable attributes.

Although ESG backlash is monitored, Adnan expressed confidence that the strategies will remain sustainable and transparent.