- Decision
- Maintain
- Rate change
- 0 bps
- overnight policy rate
- 3%
Bank Negara Malaysia’s Monetary Policy Committee left the Overnight Policy Rate unchanged at 3.00 percent at its 22 January 2025 meeting, citing contained inflation and expectations that resilient domestic demand and firm investment will keep growth on a stable path. Headline and core inflation averaged 1.8 percent in 2024 and is expected to “remain manageable” in 2025 thanks to easing global cost pressures and limited demand-driven price strains, while economic activity—already in line with projections last year—is projected to stay supported by steady employment and wage gains, a higher minimum wage and civil-service salaries, and ongoing multi-year private and public investment that should lift exports. The central bank noted the ringgit remains mainly influenced by external forces, with narrowing rate differentials versus advanced economies and domestic reform efforts offering support amid potential market volatility. Globally, growth exceeded expectations in 2024 and is forecast to hold up in 2025 on stronger labour markets, moderating inflation and less restrictive policies, though heightened trade and investment frictions could cloud the outlook. The committee said the current stance is “supportive” and pledged to stay vigilant, ensuring policy remains conducive to sustainable growth and price stability.
Rate evolution
Bank Negara Malaysia cut the Overnight Policy Rate by 25 basis points to 2.75% in July 2025 and then held it there through September 2026, pairing a pre-emptive easing with an extended pause. The July cut was framed as a step to preserve steady growth as tariff and geopolitical uncertainties threatened the external outlook, even though the domestic economy was on a strong footing and both headline and core inflation were moderate amid contained cost conditions and no excessive demand pressures. Subsequent decisions judged 2.75% appropriate and supportive as trade uncertainty initially eased somewhat and Malaysia’s economy remained resilient, with domestic demand, investment, employment and wages, alongside electrical and electronics exports and tourism, sustaining growth while inflation stayed moderate and core inflation remained close to its long-term average.
From July to September 2026, the risk narrative turned more cautious as the Middle East conflict raised uncertainty, tightened global financial conditions, lifted energy and commodity prices and caused supply disruptions, but the Monetary Policy Committee continued to hold the Overnight Policy Rate at 2.75%, including on 3 September, as it judged the stance consistent with continued price stability and sustainable growth. Bank Negara Malaysia said the economy expanded by 5.7% in the first half of 2026, driven by stronger-than-expected exports and sustained domestic demand, and expected the momentum to bring full-year growth to around 5%, supported by electrical and electronics and technology-related non-electrical and electronics exports, tourist spending, stable labour market conditions and ongoing investment. Headline and core inflation averaged 1.8% and 2% respectively in the first seven months, with the pass-through of elevated costs contained by domestic policy measures, stable demand conditions and limited wage spillovers, although the Committee remained vigilant to cost pressures and domestic demand conditions amid uncertainty surrounding the Middle East conflict.