PETALING JAYA: Bank Negara Malaysia (BNM) is widely expected to keep the overnight policy rate (OPR) unchanged at 2.75% at this Thursday’s Monetary Policy Committee (MPC) meeting, with 15 of 16 economists in a Bloomberg survey forecasting a pause in cuts.
Analysts said growth risks and external trade volatility will remain the key drivers of future policy direction.
CIMB Research said the “worst-case tariff outcome” has been avoided, with Malaysia securing a reduction from 25% to 19% in line with regional peers.
This, it said, keeps gross domestic product (GDP) growth within BNM’s revised forecast range for this year between 4% and 4.8%.
“The MPC statement is likely to emphasise data dependence, with noisy post-front-loading trade data key to assessing downside risks to GDP growth,” the research house said.
“Risks to the growth outlook remain the principal catalyst for changes in BNM’s monetary policy stance,” it added.
CIMB Research expects GDP to grow 4.3% this year, noting that the second quarter (2Q25) performance of 4.4% year-on-year likely represents the peak ahead of a slowdown in 3Q25.
While the US Federal Reserve (Fed) may move towards rate cuts, CIMB Research noted that BNM’s policy decisions have historically been less influenced by US monetary shifts.
It pointed out that the OPR did not mirror the Fed Funds Rate’s climb in 2022 to 2023, underscoring that a more dovish Fed alone would not be enough to trigger further easing.
“BNM is likely to stress data dependence in the September MPC statement, which will also update forward guidance and its growth assessment.
“While a November move cannot be ruled out if the lower bound of BNM’s forecast range is breached, pointing to a deeper trade shock than currently anticipated, a more plausible timeline is early 2026,” the research house said.
The precedent, it noted, was in January 2020 when the central bank delivered a second cut after its initial move in May 2019 in response to persistent export weakness in 2H19.
Still, CIMB Research said the OPR outlook remains skewed downwards.
The research house said while exports remained strong through July, growth is slowing, with concerns looming over a potential downturn due to front-loaded electrical and electronics (E&E) shipments ahead of US tariffs.
“The sharp July uptick, driven by a surge in E&E exports to Singapore, likely reflected urgency in shifting inventory ahead of early August tariff negotiations. However, exports are expected to normalise, tracking weaker global semiconductor sales and trends among peers such as South Korea.”
Similarly, Moody’s Analytics expects BNM to keep the OPR at 2.75%.
Moody’s Analytics said the central bank’s 25-basis-point OPR cut in July was “a pre-emptive move in the face of an increasingly uncertain external environment”.
“Since then, industrial production and export figures have come in better than expected.
“A potential rate cut by the Fed in September, together with subdued headline inflation, would create room for the central bank to loosen monetary policy if the external situation deteriorates,” Moody’s noted in its Asia Pacific Weekly Highlights and Preview research note yesterday.
Meanwhile, Kenanga Research maintained its view that BNM will hold the OPR at 2.75% in both September and November.
The research house expects domestic growth to remain steady, albeit moderating, supported by stable retail sales in June, core inflation in July, various policy measures and the current favourable interest rate environment.
“Nevertheless, further easing remains possible if domestic demand weakness emerges due to external shocks,” Kenanga Research noted.
“With consensus GDP growth projections ranging from 3.7% to 4.5% for this year and 3.5% to 5% for next year, the central bank is expected to remain cautious, saving its bullet for future needs favouring targeted measures over broad policy shifts.”
