Bank Negara Malaysia Holds Overnight Policy Rate at 3% Amid Positive Economic Prospects
Bank Negara Malaysia (BNM) announced today that it will maintain the overnight policy rate (OPR) at 3%, a decision aimed at sustaining economic momentum while balancing inflationary pressures. This rate aligns with the central bankโs current evaluation of economic growth and inflation outlook.
โAt the current OPR level, the monetary policy stance remains supportive of the economy and is consistent with the current assessment of inflation and growth prospects,โ BNM stated in its monetary policy report.
Global Economic Conditions: Positive Growth Amid Challenges
BNM highlighted that the global economy continues to expand, bolstered by resilient labor markets and an ongoing recovery in trade. Expectations for sustained global growth are supported by robust labor conditions, moderating inflation, and easing monetary policies.
The central bank pointed to the resilience in both electrical and electronics (E&E) and non-E&E sectors as key drivers of global trade recovery. However, it cautioned that growth remains exposed to risks such as heightened geopolitical tensions, volatile financial markets, and a potential slowdown in major economies.
Malaysiaโs Economy: Strong Domestic Expenditure and Export Growth
For Malaysia, recent indicators suggest robust economic activity, fueled by strong domestic spending and an increase in exports. BNM noted that the export sector is expected to benefit from the global technology upcycle, high demand for non-E&E goods, and rising tourist expenditure.
Investment activity is projected to grow due to ongoing multi-year projects in both private and public sectors, as well as the implementation of catalytic initiatives under national master plans. These investments, supported by higher capital imports, are set to enhance Malaysiaโs export capacity and expand its productive economic base.
BNM further emphasized that measures in the 2025 Budget will provide additional support, though potential risks to growth could arise from lower external demand or disruptions in commodity production.
Inflation Outlook: Stable and Manageable
Headline and core inflation in Malaysia have remained modest, averaging 1.8% year-to-date. For 2025, BNM expects inflation to remain under control, aided by easing global cost pressures and the absence of excessive domestic demand. However, inflation could be influenced by the specific implementation details of announced domestic policies.
Conclusion
With the overnight policy rate held steady, BNM is positioning Malaysia for continued economic growth. The combination of strong domestic spending, robust export activity, and supportive policy measures is anticipated to propel Malaysiaโs economic performance into 2025. However, the central bank remains vigilant, monitoring external risks and inflationary trends that could impact the nation’s economic trajectory.
