- Decision
- Maintain
- Rate change
- 0 bps
- overnight policy rate
- 2.75%
Bank Negara Malaysia’s Monetary Policy Committee kept the Overnight Policy Rate at 2.75 percent, judging the stance as “appropriate and supportive” amid moderate inflation and resilient growth prospects. After a 25 bp cut in July 2025, the rate has been unchanged at 2.75 percent in the subsequent September and November meetings. The corridor around the OPR therefore stays at 3.00 percent (ceiling) and 2.50 percent (floor). The Committee highlighted better-than-expected third-quarter growth on the back of firm domestic demand, robust electrical and electronics exports and rebounding commodity output, and expects resilient consumption, ongoing multi-year investment projects and Budget 2026 measures to underpin activity into 2026, though it flagged downside risks from weaker global trade and commodity production. Headline and core inflation averaged 1.4 percent and 1.9 percent respectively year-to-date; both are projected to remain moderate next year as global cost pressures ease and domestic reforms have only a limited impact on prices. Globally, growth is supported by strong labour markets, moderating inflation and easier policies, but higher or targeted tariffs, geopolitical tensions and stretched asset valuations pose risks, partly offset by potential pro-growth measures abroad. The MPC reiterated it will monitor developments and assess the balance of risks to growth and inflation.
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.