Bank Negara Malaysia (BNM) is expected to keep the country’s benchmark interest rate unchanged until at least the middle of next year, before possibly lowering it. Economists say this reflects slower economic growth and weaker demand from Malaysia’s major trading partners.

CIMB Treasury and Markets Research expects the Overnight Policy Rate (OPR) to stay at 2.75% through the first few months of 2026, as domestic spending remains firm. However, it also expects weaker exports to slow the economy later, leading to a possible small rate cut of 0.25 percentage points around May 2026.

IPPFA Sdn Bhd’s economist Mohd Sedek Jantan agrees that BNM may reduce the OPR by mid-2026 if growth turns weaker than expected. OCBC Bank also sees the possibility of a small rate cut next year, as softer global demand and new US semiconductor tariffs could hurt Malaysia’s exports.

BNM Keeps OPR At 2.75% In Latest Meeting

BNM’s Monetary Policy Committee (MPC) decided on Thursday to keep the OPR unchanged at 2.75%, matching market expectations. The last change was in July 2025, when the central bank unexpectedly lowered the rate by 0.25 percentage points to support growth amid global uncertainty.

The next MPC meeting will take place on 22 January 2026.

CIMB: Festive Spending To Support Growth

CIMB said local spending should stay strong early next year. Festive periods such as Chinese New Year, Ramadan, and Hari Raya usually lift consumer spending. The government’s plan to give RM100 cash assistance to Malaysians aged 18 and above in February 2026 will also help.

Still, weaker demand from overseas markets could reduce exports in the first half of the year, possibly leading to a rate cut in the second quarter.

IPPFA: Global Rate Changes Could Affect Malaysia

Mohd Sedek said that if the United States Federal Reserve, America’s central bank, cuts its interest rate several times next year, it could attract more money into emerging markets like Malaysia. However, he warned that this could also cause currency swings and uncertainty.

“For Malaysia, this could lead to the ringgit becoming stronger, which might make our exports less competitive,” he explained. “BNM could then decide to cut rates early to keep the economy stable.”

OCBC: Export Headwinds May Prompt Rate Adjustment

OCBC economist Lavanya Venkateswaran said Malaysia’s exports to the United States rose sharply in early 2025, so some slowdown is likely in 2026 as demand returns to normal.

She added that potential US tariffs on semiconductors could hurt Malaysia’s electrical and electronics exports, which make up about 70% of shipments to the US. OCBC expects the economy to grow 3.8% in 2026, down from 4.6% this year, and sees another small rate cut from BNM.

RHB And UOB Expect Policy To Stay Unchanged

Not all banks expect a rate cut next year. RHB Global Economics & Market Strategy said that steady domestic demand and easing trade tensions mean the current rate may stay unchanged. The bank expects Malaysia’s economy to grow 4.7% in 2026, with inflation averaging 1.8%.

UOB Global Economics & Markets Research also believes the current OPR level supports both growth and stable prices. It noted that government spending and improving trade conditions are helping balance the economy.

“BNM’s current approach remains balanced, with moderate inflation and manageable risks,” UOB said.

Inflation Stays Mild, Prices Remain Stable

Inflation in Malaysia has stayed low this year. Headline inflation, which measures overall price increases, averaged 1.4%, while core inflation, which excludes volatile items, averaged 1.9%. Economists expect this trend to continue, helped by stable commodity prices and contained costs.

BNM has said that the effects of recent policy changes on inflation remain under control. This allows the central bank to keep its current policy until clearer signs of change appear in both global and domestic conditions.

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