KUALA LUMPUR: Bank Negara has kept the overnight policy rate (OPR) unchanged at 2.75%, the level it was reduced to in July, in line with expectations.
According to Bloomberg, a survey of 24 economists found that 22 expected the central bank to hold rates steady, while the remaining two projected another 25-basis-point cut.
The July adjustment marked Bank Negara’s first change to the benchmark rate since May 2023.
ALSO READ: Bank Negara expected to hold OPR at 2.75% to support borrowers
“At the current OPR level, the Monetary Policy Committee (MPC) considers the monetary policy stance to be appropriate and supportive of the economy amid price stability.
“The MPC will continue to monitor ongoing developments and assess the balance of risks surrounding the outlook for domestic growth and inflation,” Bank Negara said in a statement.
The central bank said the latest indicators point towards continued expansion in global growth, supported by sustained consumer spending and front-loading activities. The conclusion of several trade negotiations has, to some extent, helped ease global uncertainty.
Bank Negara said global growth outlook remains supported by favourable labour market conditions, a less restrictive monetary policy stance and ongoing fiscal stimulus.
ALSO READ: No change expected for OPR
Nevertheless, trade policy developments are expected to weigh on growth ahead, as the impact of announced tariff rates takes hold and earlier frontloading activity fades.
It noted that downside risks persist, though to a lesser degree, stemming mainly from potentially higher product-specific tariffs and rising geopolitical tensions. Such uncertainties could still trigger greater volatility in global financial markets and commodity prices.
Upside potential includes favourable outcomes from remaining US trade negotiations and pro-growth policies in major economies, Bank Negara said.
In the first half of 2025, the Malaysian economy expanded by 4.4%, driven by sustained spending and investment, and remains on track to grow between 4% and 4.8% for the year.
“Moving forward into 2026, growth will continue to be supported by resilient domestic demand. Employment, wage growth and income-related policy measures will remain supportive of household spending,” Bank Negara said.
ALSO READ: BNM likely to hold rates at next meeting
The central bank said investment growth will be supported by progress on multi-year projects across the private and public sectors, continued realisation of approved investments, and the rollout of catalytic initiatives under national master plans and the 13th Malaysia Plan.
“This outlook remains subject to uncertainties, in particular surrounding global developments. Downside risks to the growth outlook remain from slower global trade, weaker sentiment, as well as lower-than-expected commodity production,” it said.
Meanwhile, favourable US trade outcomes, pro-growth policies, sustained demand for electronics and strong tourism could lift Malaysia’s exports and growth.
In the first seven months of the year, headline inflation averaged 1.4% while core inflation came in at 1.9%.
“Headline inflation for 2025 and 2026 is expected to remain moderate amid contained global cost conditions,” Bank Negara said, adding that the easing trend in global commodity prices is expected to contribute to moderate domestic cost conditions.
“Core inflation is expected to remain stable and close to the long- term average, reflecting continued expansion in economic activity and the absence of excessive demand pressures.
“This trend is expected to continue going into 2026. In this environment, the overall impact of the announced and upcoming domestic policy reforms on inflation is expected to be contained,” Bank Negara said.
