KUALA LUMPUR: Bank Negara Malaysia (BNM) kept the overnight policy rate (OPR) unchanged at 2.75% yesterday, extending its pause in monetary policy after a 25-basis-point cut in July 2025.
The move was widely anticipated, with economists surveyed by Bloomberg and Reuters expecting BNM to leave the OPR unchanged at 2.75% at its fourth Monetary Policy Committee (MPC) meeting of the year.
“At the current OPR level, the MPC considers the monetary policy stance to be appropriate and consistent with the outlook of continued price stability and sustainable economic growth.
“The MPC will remain vigilant to ongoing developments and assess the balance of risks surrounding the outlook for domestic inflation and growth,” BNM said in a statement.
The central bank said the latest indicators continued to point to broadly resilient global growth, underpinned by robust expansion in the technology sector, alongside improving supply conditions and prices of key commodities.
It said a sustained de-escalation of the Middle East conflict would further improve global supply chain conditions.
However, it noted that downside risks to global growth remain, stemming from continued uncertainty surrounding the conflict, tighter global financial conditions and concerns over elevated financial market valuations.
On the upside, BNM said global growth could receive further support from a faster-than-expected improvement in supply chain conditions, stronger technology- related spending and pro-growth policy measures in key economies.
For Malaysia, BNM said the latest developments point to resilient economic growth in the second quarter, supported by sustained domestic demand and stronger- than-expected export performance.
It added that ongoing uncertainties surrounding the Middle East conflict could affect the outlook for domestic inflation and economic growth.
“Malaysia’s strong fundamentals will continue to underpin the economy’s resilience against external shocks. Employment, wage growth and policy measures will remain supportive of household spending,” it said.
BNM also said investment activity would be driven by the continued progress of multi-year projects across the private and public sectors, the implementation of new smaller-scale public projects, sustained realisation of approved investments, and the ongoing rollout of national master plans.
The external sector is expected to receive further support from an improving global outlook and continued robust demand for electrical and electronics (E&E) products, while additional growth will be underpinned by a recovery in non-E&E exports and sustained tourist spending.
As a result, BNM expects Malaysia’s economy to expand within its 2026 growth forecast range of 4% to 5%.
The outlook remains subject to downside risks from a prolonged conflict in the Middle East and weaker commodity production.
Upside risks to growth include a better global outlook following a de-escalation of the conflict, stronger demand for E&E products and higher tourism activity.
“Headline and core inflation in the first five months of the year averaged 1.7% and 2.1% respectively, broadly within expectations, amid some initial pass-through of higher global cost pressures.”
BNM said developments surrounding the Middle East conflict remain fluid, with elevated global commodity prices expected to exert upward pressure on inflation.
“Nevertheless, the impact on both headline and core inflation in 2026 is expected to remain contained, reflecting domestic policy measures and stable demand conditions, which will mitigate the pass-through of external cost pressures to domestic prices,” it said.
