Bank Negara Malaysia, the central bank, said on Thursday that it decided to raise the Overnight Policy Rate (OPR) by 25 basis points to 2.25 percent on inflation concern. The bank said in a statement released by the bank after its Monetary Policy Committee (MPC) meeting here on Thursday that given the improved domestic economic outlook, the MPC decided to adjust the OPR towards normalizing monetary conditions and preventing the risk of financial imbalances that could undermine the economic recovery process. The floor and ceiling rates of the corridor for the OPR are correspondingly raised to 2 percent and 2.50 percent respectively, said the bank. The recovery in the global economy is progressing amidst continued policy support and improvements in financial conditions, with the emerging economies unveiling a stronger momentum than the advanced economies, especially for regional economies, it said. Malaysia's domestic economy reversed from negative growth to a 4.5-percent growth in the fourth quarter of 2009, which affirmed the economic recovery is firmly established, said the bank. The economy shrank by 1.7 percent in 2009, higher than the bank's prediction. It forecast that the growth would strengthen further thanks to increasing demand in and out of the country, particularly from the regional economies, which are expected to sustain growth momentum. With improved economy, the bank predicted that the prices would rise moderate this year, reflecting the prevailing economic conditions and taking into account possible adjustments in administered prices. However, it noted that external factors, including rising commodity and food prices, might exert some additional upward pressure on domestic prices. Malaysia reported an average inflation rate 0.3 percent for 2009 but it went up to 1.3 percent in January this year. The bank stressed that at the new level of the OPR, the monetary policy would continue to remain accommodative and supportive of economic growth. The OPR was reduced to historic low of 2.0 percent in February 2009 as a key measure to avert a severe and fundamental economic downturn, and it remained unchanged until this month. 