KUALA LUMPUR, March 8 — Malaysia's central bank is expected to hold its key interest rate steady tomorrow, a decision that comes as markets wait to see who will succeed the respected, long-serving governor.

All 11 economists in a Reuters poll expect Bank Negara Malaysia (BNM) to maintain the overnight policy rate at 3.25 per cent, where it has stayed since July 2014.

They note that Malaysia had better-than-expected growth in the last quarter of 2015, and see no need to change the key rate at this point.

Tomorrow's meeting will be the last for Governor Tan Sri Zeti Akhtar Aziz, who retires on April 30 after 16 years at the helm.

Rather than the rate decision, “what likely matters more for markets near-term will be the appointment of Governor Zeti's successor,” Bank of America Merrill Lynch (BoAML) economist Chua Hak Bin said in a research note.

There has not been any indication of who will succeed Zeti. BNM will make a recommendation to Prime Minister Datuk Seri Najib Razak's government, which will decide what name to submit to Malaysia's king for formal appointment.

For months, Najib has faced calls to resign over a financial scandal tied to state-owned fund 1Malaysia Development Berhad (1MDB) and about US$681 million (RM) deposited into his personal bank account.

Zeti's exit has raised concerns about whether her successor will be independent and competent, and continue to follow similar policies.

No need to change

UOB Bank Malaysia economist Julia Goh said she believes the central bank will avoid any drastic policy change regardless of who takes over, in order to sustain market confidence.

At present, “markets are very much focused on who will be the new governor,” Goh said, adding “we should still be watching the data.”

To economists, the data indicates no need to change the policy rate. Chua of BoAML said he expects no change for the rest of 2016, noting that pressures on the ringgit have diminished.

This year, the ringgit has strengthened about 4.6 per cent against the US dollar. In 2015, it was Asia's worst performing currency, shedding 18.5 per cent against the dollar.

In October-December, Malaysia's economy expanded 4.5 per cent from a year earlier, faster than forecast. Compared with the previous quarter, the country's current account surplus doubled to RM11.4 billion.

Southeast Asia's third-largest economy grew five per cent in 2015, slowing from six per cent in 2014. In January, Najib cut this year's forecast to 4.0-4.5 per cent from 4.0-5.0 per cent. — Reuters