KUALA LUMPUR: Bank Negara Malaysia left the Overnight Policy Rate unchanged at 3.00 per cent.
The monetary policy committee, which met for the second time this year, warned of risks to global growth even though there is recovery in economic activities.
These include threats such as protectionism, geopolitical developments, heightened volatility of financial markets and negative developments in the prices of key commodities.
The central bank expects the growth momentum for the Malaysian economy to be sustained in 2017.
"With the growth of domestic demand being sustained, the more positive contribution from the external sector will lead to a better performance of the Malaysian economy. "
It warned of higher headline inflation in the first half of the year before moderating thereafter.
"The cost-driven inflation is not expected to have a significant impact on the broader price trends given the stable domestic demand conditions.
"Core inflation is expected to increase modestly. "
The ringgit, along with other emerging market currencies, has continued to stabilise, it added.