- Decision
- Maintain
- Rate change
- 0 bps
- overnight policy rate
- 3%
Bank Negara Malaysia’s Monetary Policy Committee kept the Overnight Policy Rate unchanged at 3.0 percent on 8 May 2025, judging the existing stance appropriate as inflation is contained and domestic demand is expected to anchor growth even as external risks from escalating trade tensions rise. The OPR has remained at 3.0 percent since at least January 2025. The statement introduced no new liquidity or corridor measures. Headline and core inflation averaged 1.5 percent and 1.9 percent respectively in the first quarter and are projected to stay manageable this year amid moderating global commodity prices and the absence of excessive domestic demand pressures; first-quarter economic activity strengthened on resilient household spending and sustained private and public investment, although the balance of risks is tilted to the downside. The central bank noted that the ringgit’s trajectory is driven largely by external factors, with Malaysia’s sound fundamentals and reform agenda providing underlying support. It cautioned that intensifying US tariff actions, retaliatory measures and broader geopolitical uncertainties could dampen global growth and spur financial-market volatility, and pledged to remain vigilant to ensure monetary policy stays conducive to sustainable growth with 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.