KUALA LUMPUR, Sept 4 — Bank Negara Malaysia’s (BNM) Monetary Policy Committee (MPC) has maintained the overnight policy rate (OPR) at 2.75 per cent.
It said that the latest indicators suggested continued expansion in global economic growth, supported by sustained consumer spending and front-loading activities.
The conclusion of many trade negotiations has, to some extent, eased global uncertainty.
"The global growth outlook would remain supported by positive labour market conditions, less restrictive monetary policy and fiscal stimulus," BNM said in a statement today.
Nonetheless, trade policy developments are still expected to weigh on global growth going forward, as announced tariff rates take effect and frontloading activities dissipate.
It noted that downside risks remain, albeit to a lesser degree, arising from potentially higher tariffs, especially product-specific ones and escalations in geopolitical tensions.
"These lingering uncertainties could lead to greater volatility in the global financial markets and commodity prices," BNM said.
It added that the upside potential includes favourable outcomes from remaining US trade negotiations and pro-growth policies in major economies.
Malaysia's economy expanded by 4.4 per cent in the first half of 2025, underpinned by sustained spending and investment activities. It is on track to grow between 4.0 and 4.8 per cent in 2025.
Moving forward into 2026, BNM said that growth will continue to be supported by resilient domestic demand, and that employment, wage growth, and income-related policy measures will remain supportive of household spending.
"The expansion in investment activity will be driven by the progress of multi-year projects in both the private and public sectors, the continued high realisation of approved investments, as well as the ongoing implementation of catalytic initiatives under the national master plans and the 13th Malaysia Plan (13MP).
"This outlook remains subject to uncertainties, in particular surrounding global developments," it said.
However, BNM cautioned that downside risks to the growth outlook remain from slower global trade and weaker sentiment, as well as lower-than-expected commodity production.
On the other hand, favourable outcomes from remaining United States trade negotiations and pro-growth policies in major economies, continued demand for electrical and electronic goods, as well as robust tourism activity, could raise Malaysia’s export and growth prospects.
Headline and core inflation averaged 1.4 per cent and 1.9 per cent in the first seven months of the year, respectively.
"Headline inflation for 2025 and 2026 is expected to remain moderate amid contained global cost conditions. The easing trend in global commodity prices is expected to contribute to moderate domestic cost conditions," it said.
Core inflation is expected to remain stable and close to the long-term average, “reflecting continued expansion in economic activity and the absence of excessive demand pressures.”
"This trend is expected to continue going into 2026. In this environment, the overall impact of the announced and upcoming domestic policy reforms on inflation is expected to be contained," BNM said.
At the current OPR level, the MPC considers the monetary policy stance to be appropriate and supportive of the economy amid price stability.
"The MPC will continue to monitor ongoing developments and assess the balance of risks surrounding the outlook for domestic growth and inflation," it said.
