- Decision
- Maintain
- Rate change
- 0 bps
- overnight policy rate
- 2.75%
Bank Negara Malaysia’s Monetary Policy Committee left the Overnight Policy Rate unchanged at 2.75 percent on 22 January 2026, judging that the current stance remains “appropriate and supportive” as domestic demand stays resilient and both headline and core inflation are seen contained. After a 25 bp cut in July 2025, the rate has been held steady at 2.75 percent in subsequent meetings. Headline and core inflation averaged 1.4 percent and 2.0 percent respectively in 2025 and are expected to stay moderate in 2026 amid easing global cost pressures and stable demand conditions, while economic growth is projected to remain near the upper end of the 2025 forecast and continue into 2026, underpinned by firm employment, wage gains, policy-driven household income support and ongoing public- and private-sector investment projects; exports should benefit from robust electrical and electronics shipments and higher tourist spending. Globally, the committee noted that 2025 growth exceeded expectations thanks to lower tariffs, strong AI-related tech spending and fiscal support, and it expects resilience in 2026 despite risks from potential tariff increases, geopolitics and financial-market volatility. The MPC will keep monitoring the balance of risks to its growth and inflation outlook.
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.