Bank Negara Malaysia (BNM) today increased the overnight policy rate by another 25 basis points to 2.75% in the fourth such move this year.
The OPR was lowered from 3% to 1.75% during the Covid-19 pandemic.
BNM increased it by 25 basis points to 2% in May, and again to 2.25% in July.
On Sept 8, it increased the OPR by a further 25 basis points to 2.5%.
BNM, in its last meeting of the year, said the ceiling and floor rates of the OPR corridor would be correspondingly increased to 3.00% and 2.50%.
It said the adjustment would also pre-emptively manage the risk of excessive demand on price pressures, consistent with the recalibration of monetary policy settings balancing the risks to domestic inflation and sustainable growth.
"At the current OPR level, the stance of monetary policy remains accommodative and supportive of economic growth.
"The monetary policy committee is not on any preset course, which means that monetary policy decisions will continue to depend on evolving conditions and their implications on the overall outlook to domestic inflation and growth," it said in a statement.
BNM said any adjustments to monetary policy settings going forward would continue to be made in a measured and gradual manner, ensuring that monetary policy remains accommodative to support sustainable economic growth in an environment of price stability.
It said the latest indicators showed that economic activity had further strengthened in the third quarter, driven primarily by robust domestic demand.
"Going forward, despite the challenging global environment, domestic demand will remain the key driver of growth. Household spending will continue to be underpinned by improvements in labour market conditions and income prospects," it added.
The central bank also said that "domestic liquidity remains sufficient, with the continued orderly functioning of the financial and foreign exchange markets, while financial institutions also continue to operate with strong capital and liquidity buffers".
It said headline inflation was "likely to have peaked in the third quarter of 2022 and was expected to moderate thereafter, albeit remaining elevated", in line with earlier assessments.
Underlying inflation, as measured by core inflation, is projected to average closer to the upper end of the 2.0- 3.0% forecast range in 2022, and has averaged 2.7% year-to-date, given some demand-driven price pressures amid the high-cost environment.