KUALA LUMPUR: Malaysia's central bank Tuesday (May 7) cut its key interest rate for the first time in almost three years as it looks to boost slowing growth as China-US trade tensions weigh on the economy.
The move comes as central banks around the world adopt a more dovish stance in the face of a weak global outlook.
Bank Negara Malaysia cut the rate from by 25 basis points to 3.00 per cent, the first reduction since July 2016. The last change was in January 2018 when borrowing costs were increased to 3.25 per cent.
The bank said "considerable downside risks to global growth remain, stemming from unresolved trade tensions and prolonged country-specific weaknesses in the major economies".
"Heightened policy uncertainties could lead to sharp financial market adjustments," it added.
Malaysia is showing signs of being affected by the long-running trade dispute between Beijing and Washington, while the global economy at the same time shows signs of softness.
The cut comes as central banks from Japan to Europe to the United States look to provide monetary support.
Malaysia's exports declined 0.5 in March from a year earlier due to fewer shipments of electronics and commodities.
The dispute between the world's two biggest economies has seen them impose tariffs on hundreds of billions of dollars worth of goods.
Hopes of a resolution to the row in the near future were dented by President Donald Trump's threat on Sunday to more than double levies already imposed on Chinese exports to the US.
On the domestic front, Malaysia's central bank said that while "monetary and financial conditions remain supportive of economic growth, there are some signs of tightening of financial conditions".
Full-year 2018 growth slipped to 4.7 per cent, from 5.9 per cent the previous year, and Malaysia's stock market has been one of the world's worst performing this year.