- 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 on 7 May 2026, judging that this level remains consistent with sustainable growth and contained inflation amid heightened uncertainty from the Middle East conflict, which is pushing up global commodity prices and straining supply chains. The OPR has been steady since a 25 bp reduction in July 2025. Headline and core inflation averaged 1.6 percent and 2.1 percent respectively in the first quarter, and while higher energy and commodity costs are expected to lift prices modestly, domestic policy measures and stable demand should keep overall inflation pressures in check. Recent indicators show Q1 growth continuing on solid domestic demand and robust electrical and electronics exports, with employment and wage gains, multi-year investment projects and tourism underpinning activity; risks stem from a prolonged conflict and lower commodity output, while de-escalation and stronger tech demand could provide upside. Globally, resilient expansion is being tempered by the conflict-induced surge in energy prices, supply disruptions, tighter financial conditions and stretched asset valuations. The committee said it will remain vigilant and stands ready to reassess the balance of risks to inflation and growth.
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.