BNM raises policy rate to 3
Headline, core inflation to average 2.83.8 in 2023
Strong growth expected in Q1 2023
BNM unlikely to tighten further analysts

KUALA LUMPUR, May 3 Reuters Malaysia39;s central bank unexpectedly raised its benchmark interest rate on Wednesday, as it looks to manage persistent inflation amid strong domestic demand.

Bank Negara Malaysia BNM lifted its overnight policy rate by 25 basis points to 3, confounding economists expectations for an extended pause.

Some economists now see the move marking the end of the current tightening cycle as price pressures ease along with slowing global growth that will likely hurt the exportdriven economy.

BNM had kept rates unchanged at its two previous meetings this year, as it sought to assess the impact of four consecutive hikes totalling 100 basis points in 2022.

The Southeast Asian economy has bounced back strongly from a pandemicinduced slump, with growth hitting a 22year high of 8.7 in 2022, but slowing global demand has clouded the outlook for the exporter of oil, commodities and high tech goods.

BNM said in a statement that latest developments point towards further expansion in economic activity in the first quarter of 2023, driven by strong domestic demand, household spending and better labour market conditions.

While inflation was expected to moderate, core inflation would remain at elevated levels amid firm demand conditions, it said.

With the domestic growth prospects remaining resilient,…