KUALA LUMPUR: Bank Negara has maintained the overnight policy rate (OPR) at 3.00%, where it has remained since May 2023, in line with economists’ expectations.
In a Reuters poll, 24 out of 30 economists had expected the rate to be held steady.
“At the current OPR level, the monetary policy stance is consistent with the current assessment of inflation and growth prospects.
“Recognising that there are downside risks in the economic environment, the Monetary Policy Committee (MPC) remains vigilant to ongoing developments to inform the assessment on the domestic inflation and growth outlook. The MPC will ensure that the monetary policy stance remains conducive to sustainable economic growth amid price stability,” Bank Negara said in a statement.
The central bank noted that the latest indicators point towards continued global growth and trade, supported by domestic demand and front-loading activities.
Global growth is expected to stay supported by strong job markets, looser monetary policy, and government spending. However, new US tariffs and retaliatory measures have made the outlook for global growth and trade less certain.
Bank Negara said the outlook is still uncertain, mainly due to trade talks and geopolitical tensions. These issues could also cause more volatility in global financial markets.
For Malaysia, economic activity expanded further in the first quarter, driven by sustained domestic demand and continued export growth.
Going forward, rising trade tensions and increased global policy uncertainty will affect the external sector. However, strong demand for electrical and electronic goods, along with higher tourist spending, will help support exports.
Overall, growth is expected to be supported by robust domestic demand. Employment and wage growth, particularly in sectors focused on the domestic market, along with income-support policies, will help sustain household spending.
“The expansion in investment activity will be sustained by the progress of multi-year projects in both the private and public sectors, the continued high realisation of approved investments, as well as the ongoing implementation of catalytic initiatives under the national master plans.
“Overall, the balance of risks to the growth outlook is tilted to the downside, stemming mainly from a deeper economic slowdown in major trading partners, weaker sentiment amid higher uncertainties affecting spending and investments, as well as lower-than-expected commodity production,” Bank Negara said.
Meanwhile, favourable trade negotiation outcomes and pro-growth policies in major economies, as well as more robust tourism activity could raise Malaysia’s growth prospects.
Headline and core inflation averaged 1.5% and 1.9% in the first quarter of 2025 respectively.
“Overall, inflation in 2025 is expected to remain manageable, amid moderate global cost conditions and the absence of excessive domestic demand pressures,” the central bank said.
Global commodity prices are expected to keep falling, helping to keep costs moderate. In this situation, the impact of domestic policy changes on inflation is expected to remain limited.
“Risks to inflation would be dependent on the extent of spillover effects of domestic policy measures, as well as external developments surrounding global commodity prices, financial markets and trade policies.”
Bank Negara said the ringgit performance will continue to be primarily driven by external factors.
“Malaysia's favourable economic prospects and domestic structural reforms, complemented by ongoing initiatives to encourage flows, will continue to provide enduring support to the ringgit,” it said.
