Bank Negara Malaysia kept the Overnight Policy Rate (OPR) at 2.75 per cent.
The Monetary Policy Committee (MPC) views this level as “appropriate and supportive” for the economy while ensuring price stability.
This marks the first MPC meeting of the year. The rate has stayed at 2.75 per cent since a 25 basis points cut in July last year. Before that, it held at 3.0 per cent for over two years.
Global and Local Outlook
Global growth in 2025 beat expectations, thanks to lower tariffs, AI-driven tech spending, and stronger fiscal aid.
For 2026, tariffs may slow things, but resilience persists from domestic demand, easing inflation, tech investments, and policy support, Bank Negara stated.
Downside risks include higher tariffs, geopolitical flares, and financial market swings. Elevated market valuations worry too.
Upside comes from more tech spending, milder tariff hits, and growth-friendly policies in big economies.
Domestic Growth Drivers
Malaysia’s 2025 growth should hit the forecast’s upper end. Momentum carries into 2026 on robust domestic demand.
Jobs, wages, and income policies bolster household spending.
Investments grow via multi-year private-public projects, new small public works, high approved investment uptake, and national master plans.
The external side gains from strong electrical and electronics (E&E) exports and tourist spending.
Inflation and Risks
Growth faces global uncertainties. Downside from weak trade or low commodity output; upside from better global growth, E&E demand, tourism surge.
Headline inflation in 2026 stays moderate with easing global costs. Commodity prices remain tame, keeping domestic costs in check.
Core inflation holds steady near long-term norms, tied to economic expansion without excess demand.
Ongoing Vigilance
The MPC will track developments and risks to growth and inflation.
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