KUALA LUMPUR: Bank Negara Malaysia is likely to cut the overnight policy rate (OPR) in early 2026 amid persistent softness in credit growth and non-electrical and electronics (E&E) exports, said CIMB Securities.
The research house expects Bank Negara to maintain the OPR at 2.75 per cent at its final policy meeting of the year this week, supported by strong third-quarter economic performance and improving trade activity.
“An early-2026 rate cut remains possible. This hinges on two key indicators, sustained weakness in non-E&E exports and moderation in business and working capital credit growth.”
“If these trends persist, they could justify a 25-basis-point easing in the first quarter of 2026,” the firm said in a note.
CIMB Securities said while export growth has broadened, driven primarily by the E&E segment, non-E&E exports contracted 2.8 per cent year-on-year as at September, mirroring the slowdown seen during the 2018–2019 United States-China trade war.
A similar pattern is emerging across the region, with Japan and Taiwan experiencing persistent weakness in non-electronics exports since the second quarter, and Singapore also seeing continued softness in its non-electronics segment.
“Overall, the regional trade landscape suggests persistent weakness in non-E&E sectors, reflecting tariff-related disruptions and weaker external demand,” it said.
The firm added that credit growth in business loans and working capital continues to soften, a trend that has historically preceded Bank Negara’s easing cycles.
Outside recessionary periods, the central bank last cut the OPR in July 2016 and May 2019 after sustained weakness in these segments.
Current trends mirror past cycles, CIMB Securites said, with credit growth peaking in mid-2024 before moderating until July 2025, when it briefly improved following the first rate cut.
Forward indicators point to renewed fragility, with export-oriented output slowing and manufacturing activity, although improving, still below the expansion threshold, reinforcing the case for further easing if conditions persist.
CIMB Securities maintained its 2025 GDP growth forecast at 4.3 per cent and projects 4.1 per cent for 2026, backed by resilient private consumption supported by a firm labour market, civil service wage adjustments and targeted government assistance.
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