KUALA LUMPUR, Jan 19 — Central banks in Indonesia and Malaysia kept their benchmark rates unchanged today to help bolster their currencies and guard against capital outflows as the US moves to tighten monetary policy.

Bank Indonesia kept its seven-day reverse repurchase rate at 4.75 per cent, as forecast by all but one of 21 economists surveyed by Bloomberg, while Bank Negara Malaysia left its overnight policy rate at 3 per cent.

The prospect of more Federal Reserve rate increases — fuelled by Donald Trump’s surprise US election win — is putting pressure on emerging-market currencies and closing the door on policy easing in Southeast Asia. Central banks in the region are now seeking to provide stability as global uncertainty mounts.

While Indonesia’s rupiah "has been broadly stable over the past month, it is likely to come under renewed downward pressure later this year if, as we expect, looser fiscal policy in the US prompts the Fed to raise rates further than markets currently anticipate,” said Gareth Leather, senior Asia economist at Capital Economics Ltd in London.

Bank Indonesia cut its benchmark rate six times last year to help support economic growth as inflation remained subdued. Price pressures are starting to build, with a central bank official today predicting inflation will climb above 4 per cent this year. Consumer prices rose 3 per cent in December from a year ago, remaining inside the bank’s target band for this year of 3 per cent to 5 per cent.

Malaysia’s outlook

Malaysia’s central bank also flagged higher inflation for 2017 in a statement announcing its rate decision. The ringgit has slumped about 6 per cent since Trump’s victory, prompting the Bank Negara to take steps to restrict some offshore foreign-exchange trading to help stabilise the currency.

"While the risks of destabilising financial imbalances are contained, the monetary policy committee will monitor these risks to ensure the sustainability of the overall growth prospects,” the bank said.

Indonesia’s growth prospects appear better than Malaysia’s for this year. The central bank said the economy will probably exceed 2016’s projection of about 5 per cent. Malaysia’s government is forecasting growth of 4 per cent to 5 per cent for this year. — Bloomberg