Bank Negara Malaysia (BNM) on Thursday raised its key interest rate to tap the brakes at a time growth has been robust and inflation creeping up.
The central bank raised the key rate by 25 basis points to 3.25 per cent to normalise the degree of monetary accommodation as the economy remains firmly on a steady growth path, officials said.
With the economy strong at present, many have anticipated a rate hike well before national elections, which must be held by August.
The fourth largest economic country of the Southeast Asia hiked the rate for the first time since July 2014, reports Reuters.
BMN said that with the rate raised to 3.25 per cent, the floor and ceiling rates of the corridor for the overnight policy rate (OPR) were correspondingly raised to 3.00 per cent and 3.50 per cent, respectively.
Malaysia is the first in Southeast Asia to raise its key rate in years, and the first Asian nation to hike them in 2018.
The central bank said inflation is expected to average lower in 2018, on expectations of a smaller effect from global cost factors.
Full year inflation for 2017 came in at 3.7 per cent, near the top of its 3-4 per cent target range, BNM said.