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Malaysia’s central bank may refrain from raising its benchmark interest rate, choosing to keep borrowing costs at a record low to boost growth even as inflation returns amid an economic recovery.

All 19 economists surveyed by Bloomberg News expect Bank Negara Malaysia to maintain its overnight policy rate at 2 percent in the decision due at 6 p.m. today in Kuala Lumpur. The benchmark is at its lowest level since it was introduced in April 2004, and has been unchanged since February last year.

Some Asian policy makers are raising borrowing costs or taking steps to remove excess cash in their banking systems to fend off inflation as the world emerges from its slump. Bank Negara expects price gains to remain manageable and any changes in interest rates will be small, CIMB Investment Bank Bhd. said Dec. 24, citing a meeting with Governor Zeti Akhtar Aziz.

“Judging by its history, Bank Negara will be among the last to tighten policy as global rates head higher this year and next,” said Sean Callow, a currency strategist in Sydney at Westpac Banking Corp. “Domestically driven inflation doesn’t seem imminent.”

Malaysia’s consumer price index climbed 1.1 percent in December from the year earlier, the first gain in seven months. The inflation rate was 0.6 percent last year, slowing from 5.4 percent in 2008, the government said Jan. 20.

Southeast Asia’s third-largest economy will probably expand 4.1 percent this year after a 2.3 percent contraction in 2009, the World Bank said last week. Prime Minister Najib Razak said Jan. 20 gross domestic product may increase 3.5 percent or more this year.

Room to Wait

Exports by companies such as Unisem (M) Bhd. rose in October after a yearlong slump, before declining in November no fax needed payday loans. The ringgit traded near a three-week low yesterday, at 3.3995 per dollar as of 5:08 p.m. in Kuala Lumpur.

“Risks on inflation and growth remain well balanced for the time being and with that, Bank Negara has enough room to sit on the current level of policy rate for another few more meetings before making the move in the third quarter,” said Irvin Seah, an economist at DBS Bank Ltd. in Singapore.

Seah expects the central bank to raise interest rates by 0.75 percentage point in the second half of 2010.

Other regional central banks are already acting on price increases in their economies. China this month unexpectedly raised the proportion of deposits that banks must set aside as reserves as a credit boom threatens to stoke inflation and create asset bubbles. Vietnam raised its benchmark interest rate by one percentage point to 8 percent late last year.

Financing Programs

Signs of improvement in the Southeast Asian economy prompted Bank Negara to keep to its schedule of ending financing programs aimed at helping companies secure funds during the slowdown. In neighboring Singapore, the government extended by a year measures to help companies get financing and prolonged a wage-subsidy program.

“As the domestic economic conditions show further improvement and with available ample liquidity, latest indicators have shown an upward trend of business loan applications and approvals in the banking system,” Malaysia’s central bank said Dec. 31, when it announced it will stop accepting new applications under its 2 billion ringgit ($588 million) assistance guarantee program for small and medium-sized companies.

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