KUALA LUMPUR: Bank Negara Malaysia has kept the overnight policy rate (OPR) unchanged at 2.75%, as widely expected.
The central bank last cut the benchmark rate by 25 basis points in July 2025, bringing the OPR to its current level.
All 24 economists polled in a Bloomberg survey expect Bank Negara to maintain the policy rate at 2.75% at its second Monetary Policy Committee (MPC) meeting of the year.
“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,” Bank Negara said in a statement.
It acknowledges uncertainties stemming from the ongoing conflict in the Middle East, noting that the impact on the global and Malaysian economy will depend on how the situation evolves.
Malaysia faces these challenges from a position of strength, supported by robust domestic growth, moderate inflation, a sound financial sector and a resilient external position.
Bank Negara noted that global growth will continue to be supported by sustained domestic demand, moderating inflation, robust technology investments, and supportive fiscal and monetary policies, building on the strengths of 2025.
However, the recent conflict in the Middle East has raised uncertainty over the global economic outlook.
It said the impact on the global economy will depend on the length and severity of the conflict. In light of recent developments, downside risks have risen, arising from further escalation in geopolitical tensions and heightened volatility in global financial markets.
Additionally, concerns remain over potentially higher tariffs and elevated financial market valuations, although stronger tech spending, a milder tariff impact and pro-growth policies in key economies could support the outlook.
The central bank said growth momentum is expected to continue in 2026, anchored by resilient domestic demand after the Malaysian economy expanded 5.2% in 2025 on strong domestic spending, higher electrical and electronics (E&E) exports and robust inbound tourism.
Employment, wage growth and policy measures will continue to support household spending.
Investment activity will be driven by the progress of multi-year projects in both the private and public sectors, the rollout of new smaller-scale public projects, sustained realisation of approved investments, as well as the ongoing implementation of national master plans.
It noted that the external sector will benefit from continued strength in E&E exports and higher tourist spending. This growth outlook remains subject to uncertainties surrounding global developments, including the recent conflict in the Middle East.
Downside risks remain from slower global trade and lower-than-expected commodity production.
“Meanwhile, upside potential to growth could arise from a better global growth outlook, stronger demand for E&E goods, and more robust tourism activity,” Bank Negara said.
It said overall headline inflation in 2026 is expected to remain moderate, after headline and core inflation stood at 1.6% and 2.3%, respectively, in January 2026.
“While global commodity prices may be subject to greater volatility given recent developments, the impact on domestic inflation is expected to be contained.
“Meanwhile, 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,” it said.
