Bank Negara Malaysia (BNM) has announced a 25 basis-point reduction in the Overnight Policy Rate (OPR), bringing it down from 3.00% to 2.75%, following the conclusion of its Monetary Policy Committee (MPC) meeting today. This marks the first time the OPR has fallen below the 3.00% threshold since March 2023.
In its official statement, BNM noted that recent global indicators reflect continued growth momentum, driven in part by resilient consumer spending and front-loaded activities in major economies. Despite this, the central bank acknowledged that external uncertainties — particularly those related to global economic developments — may pose downside risks to Malaysia’s growth outlook.
“The decision to reduce the OPR is a pre-emptive measure designed to safeguard Malaysia’s growth trajectory, particularly in an environment of moderate inflation expectations,” the central bank stated. It further added that the MPC remains vigilant and will continue to assess the evolving balance of risks related to domestic growth and inflation dynamics.
BNM also highlighted that global economic prospects remain vulnerable, particularly due to ongoing uncertainties involving trade tariffs and heightened geopolitical tensions. These factors are contributing to increased volatility in global financial markets and commodity prices.
Domestically, the Malaysian economy has continued to expand in the second quarter of 2025, supported by strong domestic demand and encouraging export performance. Moving forward, growth is expected to remain underpinned by the resilience of domestic demand.
The central bank stated that improvements in employment and wage growth will continue to support household spending. Meanwhile, both public and private sector investment is projected to rise, driven by the ongoing implementation of multi-year infrastructure projects and the materialisation of previously approved investments.
“In addition, Malaysia’s export prospects could benefit from positive trade negotiation outcomes, pro-growth policies in major economies, sustained global demand for electrical and electronic (E&E) products, and continued recovery in tourism-related activities,” BNM said.
However, it cautioned that risks to the growth outlook remain tilted to the downside. These risks stem primarily from weaker-than-expected global trade activity, subdued investor sentiment, and lower commodity output.
On inflation, BNM reported that headline and core inflation averaged 1.4% and 1.9%, respectively, between January and May. It projects that inflation will remain moderate for the remainder of the year, in line with stable cost conditions.
Regarding the performance of the ringgit, the central bank stated: “The ringgit will continue to be influenced predominantly by external developments. Nonetheless, Malaysia’s sound economic fundamentals, ongoing structural reforms, and targeted measures to attract capital inflows will provide continued support to the currency.”
