- 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 5 March 2026, judging the current stance as “appropriate and supportive” given steady domestic growth and moderate inflation but rising external uncertainties linked to the Middle East conflict and volatile global markets. After July 2025’s 25 bp cut, the rate has been held at 2.75 percent in subsequent meetings. Headline and core inflation printed at 1.6 percent and 2.3 percent, respectively, in January, and both are projected to stay moderate and near long-term averages this year, while GDP expanded 5.2 percent in 2025 and is expected to maintain momentum in 2026 on resilient domestic demand, solid employment and wage gains, ongoing public- and private-sector projects, and firm electrical-and-electronics exports alongside robust tourism. The central bank highlighted Malaysia’s sound financial sector and resilient external position even as global growth is tempered by heightened geopolitical tensions, the risk of higher tariffs and market volatility, offset by supportive fiscal–monetary stances abroad and strong tech investment. The committee pledged to keep monitoring developments and the evolving 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.