Bank Negara Maintains OPR at 2.75%, Signals Supportive Monetary Policy Amid Stable Inflation

KUALA LUMPUR: Bank Negara Malaysia has kept the Overnight Policy Rate (OPR) unchanged at 2.75%, the same level it was lowered to in July 2025, aligning with market expectations.

The decision was widely anticipated, with all 22 economists surveyed by Bloomberg predicting the central bank would maintain the rate at its first Monetary Policy Committee (MPC) meeting of the year.

In a statement, Bank Negara said that at the current OPR level, the MPC considers the monetary policy stance appropriate and supportive of economic growth while maintaining price stability.

“The MPC will continue to monitor ongoing developments and assess the balance of risks surrounding the outlook for domestic growth and inflation,” the central bank noted.

Bank Negara highlighted that global growth in 2025 exceeded expectations, driven by lower-than-expected tariffs, increased AI-led technology spending, and stronger fiscal support.

Looking ahead to 2026, the central bank said that while tariff impacts could temper global growth, the outlook remains resilient, supported by sustained domestic demand, moderating inflation, robust technology investments, and supportive fiscal and monetary policies.

The statement cautioned that downside risks persist, including higher tariffs, escalating geopolitical tensions, and volatility in global financial markets. Elevated financial market valuations also remain a concern. Conversely, potential positive factors include stronger technology spending, less severe tariff impacts, and pro-growth policies in major economies.

For Malaysia, Bank Negara expects 2025 growth to be at the upper end of its forecast range, with momentum continuing in 2026, supported by resilient domestic demand. Employment, wage growth, and income-supporting policies are expected to bolster household spending.

Investment activity will be driven by multi-year projects in the public and private sectors, implementation of new smaller-scale public projects, high realization of approved investments, and ongoing national master plan initiatives. The external sector is expected to benefit from strong electrical and electronics (E&E) exports and increased tourist spending, though uncertainties in global developments remain a key factor.

Headline inflation averaged 1.4% and core inflation 2.0% in 2025. For 2026, Bank Negara projects headline inflation to remain moderate amid easing global cost pressures, while core inflation is expected to stay stable near its long-term average, reflecting steady economic expansion without excessive demand pressures.