Inflation averaged 0.7% in 2019 and Bank Negara Malaysia expects higher or moderate average inflation in 2020.

BNM last cut its rate in May by 25 basis points to boost growth on concerns over flagging global demand.

The bank expects growth to gradually improve with support from private spending, better external demand and a modest recovery in overall investment activity.

The economists considered the rate cut was earlier than expected but will help extend the stimulus effects from the May cut and provide more support for growth over the rest of the year.

"Downside risks to growth remain. These include uncertainty from various trade negotiations, geopolitical risks, weaker-than-expected growth of major trade partners and domestic factors that include weakness in commodity-related sectors and delays in the implementation of projects," the bank said in a statement.