KUALA LUMPUR: Bank Negara Malaysia’s (BNM) Monetary Policy Committee (MPC) wrapped up its final meeting of the year by maintaining the Overnight Policy Rate (OPR) at 2.75 per cent, matching market expectations.
The central bank said the decision reflects continued global growth, while factoring in slowing external demand and ongoing global economic uncertainties.
Economists praised the move, calling it prudent and supportive of Malaysia’s stable economic momentum.
Putra Business School Professor Dr Ahmed Razman Abdul Latiff said the decision was both expected and reasonable, given the nation’s continued economic expansion and supportive fiscal measures.
Ahmed Razman said continuing growth of the local economy, as evidenced by a 5.2 per cent growth in the third quarter (Q3) compared to 4.4 per cent in the first half of the year (1H25), has supported this decision.
“Even though the inflation rate remains low, there is still room for growth without reducing the rate further, especially with the fiscal stimulus package announced by the government,” he told the Business Times.
Ahmed Razman noted that given the fact and situation that many central banks have started to reduce the interest rate this year as well as the sizable gap between the inflation rate and OPR, Bank Negara is expected to take a cautious approach to prepare for any shock in the market.
“Therefore, the central bank will not simply follow the trend but will only take a measured approach based on the situation at hand,” he said.
Echoing the views, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said Bank Negara’s move was within expectations, reflecting confidence in domestic demand despite a challenging global environment.
Mohd Afzanizam said the central bank appears quite sanguine about domestic demand, but uncertainties over the global economic condition, such as slower global trade, weak sentiment and lower commodity production, remain the main concerns.
“Inflation is expected to moderate in 2026 owing to modest global commodity prices and no excessive demand pressures. All in all, the current monetary policy stance is appropriate to support growth,” he said.
Mohd Afzanizam noted that the current real interest rate of 1.25 per cent (higher than the long-term average of 0.69 per cent) suggests that the policy rate remains relatively high in real terms, giving the central bank space to ease if needed.
“However, such a decision would depend on the evolving economic outlook. For now, the Malaysian economy remains fairly resilient, and there is no urgency for BNM to cut the OPR in the near term. To a large degree, this can be deemed ringgit-positive, as the Federal Reserve (Fed) is expected to cut the rate in December and in 2026,” he said.
In addition, economist Dr Geoffrey Williams described the decision as “wise and widely expected”, adding that Malaysia’s sound macroeconomic fundamentals supported the case for policy stability.
Williams said the basic macroeconomic fundamentals are sound with growth on target, low inflation and a sound financial sector.
“Now that tariff issues are settled, export businesses can plan more clearly. Budget 2026 was very sound in economic terms and so domestic economic indicators should also be stable.
“In my view there are no particular reasons to change the OPR as we move into 2026 and unless there are external shocks, Malaysian policymakers should hold steady,” he added
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