KUALA LUMPUR: Bank Negara Malaysia kept the overnight policy rate (OPR) unchanged at 2.75% for a seventh consecutive meeting, in line with market expectations.
The central bank has maintained the OPR at 2.75% since cutting the benchmark rate by 25 basis points in July 2025.
According to a Bloomberg survey, 20 of 22 economists had expected Bank Negara to keep the OPR unchanged, while two had forecast a 25-basis-point hike.
“At the current OPR level, the Monetary Policy Committee (MPC) considers the monetary policy stance to be 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,” Bank Negara said in a statement.
The central bank said the latest indicators pointed to resilient global growth, supported by strong expansion in the technology sector, improving supply conditions and stable labour markets.
Global inflation has eased in recent months but is expected to remain elevated, reflecting the lagged pass-through of higher energy costs to consumer prices.
“Going forward, while uncertainties surrounding the Middle East conflict will continue to weigh on global growth amid continued inflationary pressures, the impact is expected to be cushioned by sustained tech-related spending,” Bank Negara said.
It added that downside risks to global growth remained, stemming from prolonged geopolitical tensions, tighter global financial conditions and concerns over valuations in financial markets.
However, it said upside potential could come from stronger technology spending, a faster-than-expected recovery in supply chain conditions and pro-growth policy measures in key economies.
Bank Negara said the Malaysian economy expanded by a robust 5.7% in the first half of 2026 despite the challenging global environment, driven by stronger-than-expected export performance and sustained domestic demand.
“The solid growth momentum is expected to bring 2026 growth to around 5%, and the economy’s sound fundamentals are expected to keep growth resilient in 2027.
“This will be driven by the external sector, which will be lifted by improved global prospects and robust demand for electrical and electronics (E&E) goods, as well as continued strength in tech-related non-E&E exports and sustained tourist spending,” it said.
Bank Negara said stable labour market conditions and ongoing investment activity would continue to support domestic demand.
However, the growth outlook remained subject to downside risks from a prolonged conflict in the Middle East and lower commodity production. Upside potential could come from stronger-than-expected global growth, firmer technology-related export demand and higher tourism activity.
Bank Negara said headline and core inflation averaged 1.8% and 2%, respectively, in the first seven months of 2026.
“Despite elevated costs and strong economic growth, the pass-through to consumer prices has been contained by domestic policy measures and stable demand conditions amid limited spillover of external sector strength to wages,” it said, adding that uncertainty over the Middle East conflict remained, with elevated global commodity prices continuing to exert upward cost pressures.
“As these developments remain fluid, the MPC will remain vigilant to cost pressures and domestic demand conditions given their impact on the inflation outlook,” Bank Negara said.
