Bank Negara Malaysia maintains overnight policy rate at 2.75%

• At the current level, BNM said it “considers the monetary policy stance to be appropriate and supportive of the economy amid price stability”.
• The decision follows data out last month pointing to steady economic expansion in the second quarter with robust domestic demand, its main engine of growth, cushioning deceleration in exports.

KUALA LUMPUR (Sept 4): Malaysia’s central bank on Thursday kept the benchmark interest rate unchanged as widely expected while flagging uncertainties in growth outlook from lingering external risks.

The overnight policy rate is maintained at 2.75% at the second-last review scheduled for the year, Bank Negara Malaysia (BNM) said in a statement. The decision was correctly predicted by 22 of 24 economists polled by Bloomberg, while the remaining two called for a 25-basis-point cut.

At the current level, BNM said it “considers the monetary policy stance to be appropriate and supportive of the economy amid price stability”.

The decision follows data out last month pointing to steady economic expansion in the second quarter with robust domestic demand, its main engine of growth, cushioning deceleration in exports.

In July, BNM had cut the policy rate by 25 basis points in a “pre-emptive measure” to preserve growth prospects, and in May, slashed the statutory reserve requirement ratio, which stipulates the amount of cash that lenders must keep in reserve, to its lowest in 14 years.

The economy is on track to expand between 4% and 4.8% this year, and growth will continue to be supported by resilient domestic demand moving forward into 2026, BNM said on Thursday.

Apart from household spending, Malaysia’s growth will also be driven by higher investment activity in the private and public sectors, the central bank noted. However, “this outlook remains subject to uncertainties, in particular surrounding global developments”, BNM stressed.

Growth outlook is still subject to downside risks from slower global trade, weaker sentiment, as well as lower-than-expected commodity production, BNM flagged.

There are also potential upsides, the central bank noted, including from favourable outcomes from remaining US trade talks that could boost Malaysia’s export and growth prospects.

Inflation, meanwhile, is expected to remain moderate with global prices under control while core inflation, a measure of underlying price increases, is expected to remain stable without excessive demand pressures.

“This trend is expected to continue going into 2026,” BNM said. “In this environment, the overall impact of the announced and upcoming domestic policy reforms on inflation is expected to be contained.”

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