Malaysia raises interest rate for first time in 4 years

IndustriesAssociated Press

Malaysia's central bank on Thursday raised its key interest rate for the first time in four years ahead of general elections due by August.

Bank Negara Malaysia raised its overnight policy rate, used by banks to calculate interest rates, to 3.25 percent from 3 percent, citing a stronger domestic and global economy. It said the move was also to "prevent the buildup of risks that could arise from interest rates being too low for a prolonged period of time."

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The central bank last hiked the interest rate in July 2014. In July 2016, it cut the rate to 3 percent shortly after Britain's Brexit vote.

The government predicts 5.5 percent growth in the economy this year, with the ringgit currency strengthening.

Bank Negara said in a statement that inflation hit 3.7 percent last year but is expected to be lower this year.

The rate hike surprised some analysts who had expected any increase to come after the general elections, which must be held by August but are widely expected to be called in the second quarter of the year. Analysts said another rate hike would be expected after the elections to realign with higher U.S. and regional interest rates.

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