KUALA LUMPUR: Bank Negara has kept the Overnight Policy Rate (OPR) unchanged at 2.75%, the level it was reduced to in July 2025, in line with market expectations.
The decision was widely anticipated, with all 22 economists polled in a Bloomberg survey expecting the central bank to maintain the policy rate at its first Monetary Policy Committee (MPC) meeting of the year.
Bank Negara, in a statement, said that at the current OPR level, the 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,” it said.
Bank Negara said global growth for 2025 turned out higher than expected, mainly reflecting lower-than-anticipated tariffs, higher artificial intelligence (AI)-led tech spending and stronger fiscal support.
“For 2026, while the impact of tariffs could weigh on global growth, the outlook remains resilient, supported by sustained domestic demand, moderating inflation, robust tech investments, and supportive fiscal and monetary policies,” the central bank said.
It noted that downside risks remain, arising from the potential for higher tariffs, further escalation in geopolitical tensions and heightened volatility in global financial markets. In addition, concerns persist over elevated valuations in financial markets.
On the upside, potential tailwinds include stronger technology spending, a milder impact from tariffs on economic activity and pro-growth policies in major economies.
“For the Malaysian economy, growth for 2025 is expected to be around the upper end of the forecast range. This growth momentum is expected to continue in 2026, supported by resilient domestic demand,” Bank Negara said, adding that employment, wage growth and income-related policy measures will remain supportive of household spending.
The central bank noted that investment activity will be driven by the progress of multi-year projects in both the private and public sectors, the implementation of new smaller-scale public projects, continued high realisation of approved investments, as well as the ongoing implementation of national master plans.
“External sector will benefit from continued strength in electrical and electronics (E&E) exports and higher tourist spending. This growth outlook remains subject to uncertainties, in particular surrounding global developments,” it said.
Downside risks include slower global trade and lower-than-expected commodity production.
Meanwhile, upside potential to growth could arise from a more favourable global growth outlook, stronger demand for E&E goods and more robust tourism activity.
Headline and core inflation averaged 1.4% and 2.0%, respectively, in 2025.
“For 2026, headline inflation is expected to remain moderate amid the continued easing in global cost conditions. Global commodity prices are expected to remain modest, contributing to contained domestic cost conditions,” Bank Negara said.
The central bank said core inflation in 2026 is expected to remain stable and close to its long-term average, reflecting continued expansion in economic activity and the absence of excessive demand pressures.
