The central bank said on Tuesday, Jan 26 the decision was made at its monetary policy committee (MPC) meeting.
It said in the domestic economy, recent economic indicators suggest that the economy expanded favourably in the fourth quarter of 2009.
"Positive developments in manufacturing production, financing activity, external trade and labour market conditions reaffirm the assessment that the economic recovery is gaining strength.
"Going forward, the economy is expected to expand further in 2010, with growth being supported by strengthening domestic demand, particularly private consumption, and further improvements in external demand," it said.
On inflation, Bank negara said it turned positive in December. The change largely reflects the lapse of the impact from the adjustment to retail fuel prices in 2008.
It also said the pace of price increase for the year was projected to be gradual, reflecting the prevailing economic conditions and taking into account some adjustments in administered prices.
Bank Negara said in the absence of further price revisions and external influences, a positive but modest inflation rate is expected in 2010.
"Moving forward, monetary policy would remain accommodative to ensure that the economic recovery is well entrenched," it said.
However, the MPC also recognised the need to ensure that the stance of monetary policy was appropriate to prevent the build up of financial imbalances that could arise from interest rates being too low for a prolonged period of time.
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