BNM keeps key interest rate at 2.75% as widely expected

KUALA LUMPUR (Jan 22): Malaysia’s central bank has kept the benchmark interest rate unchanged as expected, taking comfort in a resilient economy with moderate inflation.

The overnight policy rate (OPR) is maintained at 2.75% following the first of six scheduled reviews for the year, Bank Negara Malaysia (BNM) said in a statement on Thursday. The move was correctly predicted by all 22 economists polled by Bloomberg.

At the current level, the monetary policy rate stance remains “appropriate and supportive of the economy amid price stability”, BNM said.

The decision follows flash estimates earlier this month pointing to stronger-than-expected economic expansion in the fourth quarter of 2025, as services and manufacturing activities picked up.

BNM last cut the policy rate in July last year. The 25-basis-point cut was labelled a pre-emptive measure to preserve growth prospects.

Malaysia's economic growth is expected to moderate to between 4% and 4.5% this year, still anchored by resilient domestic demand, following a projected 4.9% expansion in 2025.

The decision for the OPR to stay pat comes amid a narrowing gap with the US federal funds rate, which now stands at 3.5%-3.75% from north of 4.25% a year ago.

Besides household spending, BNM said domestic growth will also be driven by investment activity fuelled by the progress of multi-year projects and higher realisation of approved investments.

“The external sector will benefit from continued strength in electrical and electronics (E&E) exports and higher tourist spending," it said.

However, this growth outlook remains subject to uncertainties, BNM noted, including slower global trade and lower-than-expected commodity production.

Upside may arise from a better global growth outlook, stronger demand for E&E goods, and more robust tourism activity, it said.

Inflation, meanwhile, is expected to remain moderate amid continued easing in global cost conditions, the central bank noted. “Global commodity prices are expected to remain modest, contributing to continued domestic cost conditions,” it added.

The next review of the central bank’s Monetary Policy Committee is slated for March 6. warned.

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