PETALING JAYA: The overnight policy rate (OPR) is likely to remain at 2.75% for the rest of 2026, with most research houses expecting Bank Negara Malaysia (BNM) to stay on hold as growth remains firm and inflation contained.
However, the prospect of a gradual normalisation to 3% in 2027 has gained traction, with a shift in the central bank’s tone keeping the door open to a rate hike.
CGS International (CGSI) Research expects BNM to maintain the OPR at 2.75% for the rest of 2026 and into 2027, saying the case for an immediate hike remains insufficient despite a mildly hawkish shift in the latest Monetary Policy Committee (MPC) statement.
“While the latest MPC statement carries a mildly hawkish tone, we think the case for a rate hike remains inadequate at this stage,” it said.
CGSI Research noted that stronger growth prospects and greater vigilance towards inflation risks pointed to a firmer policy tone, but limited wage spillovers continued to constrain demand-led inflation.
Kenanga Research, likewise, maintained its call for the OPR to stay at 2.75% through 2026, saying BNM remained “comfortably on hold” as growth was assessed at around 5% and July inflation at 1.8% remained below levels that would warrant tightening.
“The current stance balances firmer growth momentum and emerging external cost pressures,” it said.
TA Research also expects no change at the final MPC meeting of the year on Nov 5, noting that the current setting remains supportive of economic activity while inflation is manageable.
However, it sees the balance of risks shifting towards a modest 25-basis-point (bps) hike in 2027, which would lift the OPR to 3%.
“This is not an immediate call for aggressive tightening.
“Rather, it reflects the possibility that BNM may need to catch up with the global interest-rate cycle if major central banks, particularly the US Federal Reserve, resume or intensify monetary tightening,” TA Research explained.
Hong Leong Investment Bank (HLIB) Research similarly expects the OPR to remain at 2.75% through end-2026 before potential normalisation to 3% in 2027.
It highlighted BNM’s decision to drop the word “appropriate” from the policy statement, interpreting the subtle change as a signal that eventual recalibration was being considered.
Apex Securities expects the OPR to stay at 2.75% in 2026, followed by a 25-bps hike in 2027. Its baseline forecasts of 5% gross domestic product growth and 2% inflation for 2026 remain within BNM’s projections.
UOB Kay Hian Research now expects BNM to raise the OPR by 25 bps to 3% at the final MPC meeting this year on Nov 5, before keeping it unchanged through 2027.
It said the latest policy statement showed greater confidence in the growth outlook alongside heightened vigilance over inflation, while retaining flexibility to normalise rates if external uncertainties ease and domestic conditions remain supportive.
As widely expected, BNM maintained the OPR at 2.75% during the September 2026 MPC meeting last Thursday.
Phillip Capital Research said the possibility of the central bank adjusting the OPR higher in the near term has risen, as strong economic growth momentum would cushion the adverse impact of an OPR hike.
“Nevertheless, given the rising uncertainty in the domestic political landscape, we believe BNM will keep the OPR at 2.75% at its final meeting of 2026 and may hike it only in 2027,” it said.
Meanwhile, an economist told StarBiz that he expects the central bank to keep the OPR unchanged through 2026, noting the potential of a rate hike next year would depend on the domestic economic conditions then.
“There is no urgency for BNM to increase the OPR. The most important thing is to stabilise the country’s economy amid the global uncertainties,” he pointed out.
