Xinhua, KUALA LUMPUR: The Malaysian Central Bank, as widely expected, yesterday raised its Overnight Policy Rate (OPR) by 25 basis points to 3.25 per cent the first time in three years, joining more central banks in tightening the monetary policy. The floor and ceiling rates of the corridor for the OPR are correspondingly raised to 3.00 per cent and 3.50 per cent respectively, Bank Negara Malaysia said in its statement.

“With the economy firmly on a steady growth path, the Monetary Policy Committee (MPC) decided to normalise the degree of monetary accommodation.”

“At the same time, the MPC recognizes the need to pre-emptively ensure that the stance of monetary policy is appropriate to prevent the build-up of risks that could arise from interest rates being too low for a prolonged period of time,” it said.

The central bank raised the OPR by 25 basis points to 3.25 per cent in July 2014, but cut its OPR to 3 per cent in July 2016. “At the current level (3.25 per cent) of the OPR, the stance of monetary policy remains accommodative. The MPC will continue to assess the balance of risks surrounding the outlook for domestic growth and inflation,” said the bank. The bank also expects Malaysia’s headline inflation to be averagely lower this year after averaged at 3.7 per cent in 2017, due to a smaller effect from global cost factors.