BNM Cuts OPR to 2.75%: Is This the Start of a Rate-Cut Cycle?
Malaysia’s central bank has reduced the Overnight Policy Rate (OPR) by 25 basis points, bringing it down to 2.75% from 3%, the first time it has been below 3% since March 2023.
While the move is widely seen as pre-emptive support for growth amid global uncertainties, economists are split on whether this signals the start of a broader rate-cut cycle, or a one-off adjustment for now.
Why Did BNM Cut the OPR?
In its policy statement, Bank Negara Malaysia (BNM) cited:
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Global growth risks from geopolitical tensions and tariff uncertainty.
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A need to preserve Malaysia’s steady growth path despite slowing export momentum.
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Contained inflation allowing policy space to support domestic demand.
BNM described the move as pre-emptive, aimed at safeguarding growth amid moderate inflation prospects.
Economists Divided: One and Done, or More Cuts Ahead?
✅ ANZ Research: Not Expecting a Full-Blown Cut Cycle
ANZ noted that BNM typically only does back-to-back cuts in crisis conditions like the Covid-19 pandemic or the Global Financial Crisis.
ANZ will be watching for signs that slowing exports begin to drag on income growth and household spending, which could trigger further easing.
✅ MIDF Research: Pre-Emptive, But Limited Room for More
MIDF called the cut a pre-emptive move to cushion slowing growth, pointing to:
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Potential US tariff threats.
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Weakness in sectors like semiconductors.
However, they highlighted that rate changes take 12–14 months to fully impact the economy, arguing targeted support for affected industries is preferable to further rate cuts this year.
✅ CIMB Treasury & Markets Research: Data-Dependent Path
CIMB said another rate cut will depend on incoming data, especially trade and growth dynamics.
They noted:
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Domestic fundamentals remain solid, with unemployment at 3.0% and headline inflation contained at 2.2%.
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The ringgit’s 5.2% YTD appreciation is helping to limit imported cost pressures.
CIMB concluded Malaysia has policy space if downside risks intensify in 2H2025.
✅ UOB Global Economics & Markets Research: Room for Another Cut
UOB described the move as a dovish shift, leaving BNM room to cut another 25 basis points if risks worsen.
Their base case:
An additional cut to 2.50% by end-4Q2025.
✅ OCBC Global Markets Research: Another Cut Expected
OCBC called the policy statement “dovish”, with BNM citing downside risks and contained inflation.
They expect another 25 bps cut at either the September or November meeting, citing:
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US tariff threats creating new trade headwinds.
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Forecast of economic growth slowing to 3.6% in 2H2025 from 4.3% in 1H2025.
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Likely drag on domestic demand if tariffs are imposed.
The Tariff Uncertainty: A Key Risk
Malaysia faces a new trade risk after US President Donald Trump unexpectedly announced a 25% tariff on all Malaysian goods, set to take effect August 1 unless negotiations succeed.
This has introduced significant uncertainty into Malaysia’s trade outlook:
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Could dampen export growth.
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Spill over into income and consumption.
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Undermine investment sentiment in export-linked sectors.
BNM’s move reflects a desire to get ahead of these risks, maintaining momentum in domestic demand.
What About the Statutory Reserve Requirement (SRR)?
BNM left the SRR unchanged at 1% during its July meeting.
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Recall that in May 2025, BNM surprised markets by slashing the SRR by 100 bps, its lowest since 2011.
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That move injected around RM19 billion of liquidity into the banking system, supporting credit availability.
BNM’s current stance keeps ample liquidity in the system to support lending and investment.
What Does All This Mean for Homebuyers?
The OPR cut is good news for property buyers:
✅ Cheaper Home Loans
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Banks are expected to lower Base Rates (BR) and Base Lending Rates (BLR) in tandem.
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Monthly repayments could drop slightly.
✅ Better Affordability for First-Time Buyers
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Supports M40 and B40 segments in urban markets like Klang Valley, Johor Bahru, and Penang.
✅ Refinancing Opportunity
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Homeowners may refinance at lower rates to reduce loan costs over time.
What About Property Investors and Developers?
✅ Improved Demand
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Lower rates stimulate buying interest, especially in the mid-market segment.
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Could help absorb existing overhang units.
✅ Supports New Launches
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Developers can plan confidently, knowing buyers have easier financing access.
✅ Easier Financing for Developers
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Lower rates also reduce borrowing costs for new projects.
Will Property Prices Rise?
Not necessarily immediately.
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The rate cut supports demand, helping prevent price declines in weaker segments.
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However, oversupply issues, location, and project quality will continue to drive price variation.
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A more pronounced rate-cut cycle would be more clearly supportive of price appreciation.
Conclusion: Expect Caution, But Room for Support if Needed
While BNM’s 25 bps cut to 2.75% is widely seen as pre-emptive, the central bank is clearly keeping its policy options open.
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Economists are split on whether more cuts will come this year.
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Much depends on trade negotiations, tariff risks, and export growth.
For homebuyers, the cut means slightly cheaper loans and improved affordability.
For investors and developers, it provides a safety net against downside risks, supporting Malaysia’s property market resilience even in a challenging global environment.
