Malaysia held its benchmark interest rate steady on Thursday, maintaining a positive outlook on the nation's growth prospects, inflation trends, and currency performance.

Bank Negara Malaysia (BNM) left the overnight policy rate at 3%, in line with predictions from all 22 economists surveyed by Bloomberg News.

Last adjusted in May last year, the monetary policy stance “remains supportive of the economy” and aligns with the current assessment of Malaysia's economic outlook, according to a statement by the central bank on Thursday.

In addition, BNM stated that exports are expected to gain from the global tech upcycle, while tourism spending is likely to keep rising. Employment and wage growth will also continue to support household spending. 

The Southeast Asian economy performed better than expected in the first half of the year and may surpass the government’s full-year growth forecast of 4% to 5%.

The central bank added that inflation has stayed subdued, with the effect of higher diesel prices being offset by policy measures aimed at minimising the impact on businesses. 

Indeed, BNM indicated that inflation is unlikely to rise above 3%, though the outlook will depend heavily on government policies as it works to reduce the budget deficit.

Moreover, there is a risk of increased price pressures if Prime Minister Anwar Ibrahim moves forward with his commitment to eliminate blanket subsidies for the country’s most commonly used gasoline, a crucial step for improving government finances.

“Malaysia’s positive economic prospects and domestic structural reforms, complemented by ongoing initiatives to encourage flows, will continue to provide enduring support to the Ringgit,” the central bank said. 

The currency has stabilised after hitting a 26-year low against the Dollar in February and has emerged as the leading performer among emerging markets this year, Bloomberg reports.