Malaysia cuts interest rate for first time in 7 years

KUALA LUMPUR, Malaysia – Malaysia’s central bank on Wednesday cut interest rates for the first time in seven years to bolster a slowing economy amid fears of greater volatility in global growth following Britain’s decision to leave the European Union.

Malaysia joins other countries in the region such as Indonesia and Singapore that have reduced interest rates this year.

Bank Negara Malaysia said it decided to reduce its overnight policy rate, used by banks to calculate interest rates, to 3 per cent from 3.25 per cent.

“Looking ahead, there are increasing signs of moderating growth momentum in the major economies,” Bank Negara Malaysia said in a statement. “Global growth prospects have also become more susceptible to increased downside risks in light of possible repercussions from the EU referendum in the United Kingdom.”

It said the rate cut would ensure that the economy remained on a “steady growth path.” The central bank last cut interest rates in February 2009.

Malaysia’s economy is expected to slow to 4-4.5 per cent this year, from 5 per cent in 2015.

“It’s a surprise move but it’s in line with the regional trend. Brexit is the trigger point,” said Wan Suhaimi Saidi, economist with Kenanga Research.