Bank Negara Malaysia’s (BNM) Monetary Policy Committee (MPC) has decided to maintain the Overnight Policy Rate (OPR) at 3% during its meeting today. 

According to the MPC, the global economic outlook for 2024 exceeded expectations, bolstered by stronger performances in major economies and robust global trade. In 2025, global growth is expected to remain stable, supported by positive labour market conditions, moderating inflation, and a less restrictive monetary policy stance. Sustained global trade, particularly from the ongoing technology upcycle, is likely to contribute to this outlook. However, potential risks, including uncertainties over trade and investment restrictions, could affect global financial markets and growth prospects.

Domestically, Malaysia’s economic growth in 2024 was in line with expectations. Growth in 2025 is anticipated to remain robust, underpinned by strong domestic expenditure. Household spending is expected to benefit from employment and wage growth, as well as policy measures such as increases in the minimum wage and civil servant salaries. Investment activity is forecasted to remain vibrant, supported by ongoing public and private sector projects, the realisation of approved investments, and initiatives under national master plans.

Exports are expected to expand further, boosted by the global technology upcycle, increased demand for non-electrical and electronics goods, and higher tourist spending. However, the economic outlook remains subject to downside risks, including a slowdown in major trading partners, heightened trade and investment restrictions, and lower-than-expected commodity production. On the other hand, greater spillover effects from the technology sector, a more robust tourism industry, and faster implementation of investment projects could provide additional growth opportunities.

Inflation averaged 1.8% in 2024 and is expected to remain manageable in 2025. Easing global cost pressures and stable domestic demand conditions are likely to keep inflation in check. Global commodity prices are projected to trend lower, contributing to moderate cost conditions. The effects of recently announced domestic policy reforms on inflation are expected to be contained, though risks remain, including potential global market developments and the spillover effects of domestic measures.

The performance of the ringgit continues to be influenced by external factors. The narrowing of interest rate differentials between Malaysia and advanced economies is expected to support the currency. While global policy uncertainties may lead to financial market volatility, Malaysia’s favourable economic outlook, structural reforms, and initiatives to encourage capital flows will provide ongoing support to the ringgit.

The MPC noted that the current OPR level supports economic activity while remaining consistent with inflation and growth projections. The committee will continue to monitor developments closely and ensure that monetary policy remains conducive to sustainable economic growth and price stability.

(Source: BNM)

• TAGS:
• Bank Negara Malaysia
• BNM
• Monetary Policy Committee
• MPC
• OPR
• Overnight Policy Rate