Malaysia is poised to keep its benchmark interest rate unchanged on Thursday, with stable growth, benign inflation and a strengthening ringgit allowing the central bank to preserve policy ammunition.
Bank Negara Malaysia (BNM) is expected to keep the overnight policy rate at 2.75% when it announces its final monetary policy decision for the year, according to all 22 economists in a Bloomberg survey.
The central bank last adjusted borrowing costs in July, with a 25-basis-point cut, after holding steady for two years.
All signs point to BNM standing pat. The economy unexpectedly accelerated in the third quarter, defying US president Donald Trump‘s tariffs, while the government revised lower its forecast for annual inflation this year. The ringgit is Asia’s top performer this year.
In other parts of Southeast Asia, Bank Indonesia governor Perry Warjiyo said last month he still sees room for additional interest rate cuts, while the Philippine central bank signalled it may ease further after unexpectedly lowering borrowing costs in October.
The Thai central bank too will likely keep monetary policy loose through next year after an easing cycle that has delivered 100 basis points of cuts since October 2024.
“When many regional central banks still sound dovish and plan to use more rate cuts to prompt growth, BNM remains an exception with its steady position, given Malaysia’s better growth prospects,” said Yun Liu, an analyst at HSBC Holdings Plc. She expects the central bank to hold its policy rate on Thursday and through 2026.
Here’s what to watch for in the statement due to be released at 3pm local time:
Growth outlook
Malaysia’s growth prospects have improved since the last central bank decision in September. Two of its biggest trading partners, the US and China, reached a truce that could reduce global trade tensions over the next one year. Malaysia also finalised a deal with the US that exempts about 12% of its exports – worth US$5.2 billion – from American tariffs.
Still, the outlook faces downside risks as Washington mulls levies as high as 300% on semiconductor imports. The US is Malaysia’s third-largest export market for chips.
“We expect Malaysia’s economic growth will be sustained, backed by growing domestic spending and business activities, on the back of a healthy labour market, mild inflation and increased arrivals of foreign tourists,” analysts at MBSB Research wrote in a note Monday.
Inflation expectations
BNM may reaffirm the government’s revised inflation forecast for the year. The finance ministry last month said consumer price increases would average 1% to 2% in 2025, lower than the central bank’s projection of 1.5% to 2.3%.
Malaysia’s inflation has remained broadly contained this year, averaging 1.4% in the first nine months of 2025. The expansion of Malaysia’s sales and service tax, revisions in petrol subsidies and fluctuations in global commodity prices are among factors expected to continue driving price pressures through the remainder of the year, RHB Bank economist Chin Yee Sian wrote in a note.
Ringgit performance
The ringgit has gained more than 6% against the dollar this year, putting it on track for its biggest annual gain versus the greenback since 2017.
The central bank’s monetary policy committee “considers exchange rate developments only to the extent that they influence the outlook for domestic inflation and growth”, BNM said last week.
