KLSE Malaysia News Update : Epic Research Malaysia

Malaysia's central bank is expected to raise its policy interest rate for the first time in more than three years to rein in spending that has ratcheted up consumer debt and inflation.

Economists expect Bank Negara to favour tighter policy at its rate review on Thursday as growth has been strong and exports are improving. "Strong growth would help mitigate the impact of an interest rate hike on slower private consumption," said Michael Wan, a Credit Suisse economist. "Higher interest rates would serve as a deterrent to new borrowers and moderate household debt," Wan added.

A majority of economists in a Reuters poll forecast a 25-basis-point increase to 3.25 per cent. The central bank has held rates steady since mid-2011.

At its meeting in May, Bank Negara signalled that key rates"may need to be adjusted" to tackle "financial imbalances".

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