* Benchmark rate held at 3.00 pct
* C.bank says domestic demand remains growth driver
* Can meet this year's 4.0-4.5 pct growth target - c.bank
By Joseph Sipalan
KUALA LUMPUR, Sept 7 Malaysia's central bank,
expressing optimism the country will stay on a steady growth
path through 2017, kept its key interest rate at 3.00 percent on
Wednesday, as expected.
Bank Negara Malaysia (BNM) said there is sufficient activity
to support the economy, even as annual growth slipped to 4
percent in the second quarter, the slowest in nearly seven
"Overall, the economy is projected to expand within
expectations in 2016, and to remain on a steady growth path in
2017," the central bank said in a statement.
Eleven of 12 economists in a Reuters poll had forecast no
change to the overnight policy rate (OPR). On July
13, BNM surprised economists with the first rate cut in seven
years, by 25 basis points.
The day after that cut, BNM Governor Muhammad Ibrahim told
the national news agency it was a "pre-emptive move" to ensure
solid growth this year and there wouldn't be a series of rate
Some economists believe BNM may cut the key rate to boost
the economy at its next meeting on Nov. 23.
"November is still up in the air," said UOB economist Julia
Goh, adding that the decision "will depend on the data and what
happens by then."
Growth in the trade-dependent Southeast Asian economy has
slowed in the last five quarters, mainly due to weakness in
global crude and commodities prices, and a slowdown in its top
trade partner China.
While noting that downside risks to global growth "remain
high", BNM said domestic demand "remained the key driver of
growth" and that in the second quarter, Malaysia's private
consumption and private investment grew at a faster pace.
Earlier on Wednesday, Malaysia reported worse-than-expected
July exports, which had their biggest slump in 15 months. They
were dragged down by a sharp dip in shipments to China and a
fall in key commodity exports.
In January, Malaysia trimmed its 2016 growth projection to
4.0-4.5 percent from 4.0-5.0 percent on expectations of a
sustained slump in global crude prices.
Inflation remains low, sliding for a fifth consecutive month
in July, when the annual rate was 1.1 percent.
Prime Minister Najib Razak faces political pressure over a
financial scandal tied to state-owned 1Malaysia Development
Berhad (1MDB) and some tough economic challenges.
The government likely will need to tighten spending to get
close to this year's targeted budget deficit of 3.1 percent of
gross domestic product. At the end of the June, the deficit
stood at 5.5 percent, according to treasury department data.
(Editing by Richard Borsuk)