KUALA LUMPUR, 2 September 2025 – Bank Negara Malaysia (BNM) is widely expected to leave its Overnight Policy Rate (OPR) unchanged at 2.75% this week and maintain that level for the foreseeable future, potentially through 2027, according to a Reuters poll of economists.
A strong consensus has emerged ahead of the September 4 Monetary Policy Committee (MPC) meeting, with 29 of 32 economists surveyed predicting that the central bank will stand pat. The remaining three respondents foresee a modest 25-basis-point cut, which would lower the OPR to 2.50%.
Terminal Rate Reached
More than two-thirds of those surveyed believe that BNM has already reached its terminal rate, signaling that the July reduction was a one-off adjustment rather than the beginning of a prolonged easing cycle. Another survey reinforced this view, with 75% of respondents forecasting the OPR will stay at 2.75% until year-end.
BNM cut rates in July—its first such move in five years—in an effort to support domestic growth as Malaysia navigates a challenging global trade landscape. However, analysts say the decision was primarily a pre-emptive measure.
“Unless there has been a material deterioration in economic conditions since then, that easing should remove the immediate need for further cuts,” said Woon Khai Jhek, Senior Economist at RAM Ratings. He added that BNM would likely take a data-dependent approach, ensuring clear communication to manage market expectations amid uncertainties such as the 19% U.S. tariff on Malaysian exports.
Inflation and Growth Indicators
Malaysia’s latest inflation data also supports the case for stability. Headline inflation ticked up to 1.2% in July, still below BNM’s full-year forecast range of 1.5% to 2.3%, indicating that price pressures remain muted.
Meanwhile, the economy is showing signs of resilience. Gross domestic product (GDP) expanded 2.1% quarter-on-quarter, up from 0.7% in the previous quarter, suggesting that growth momentum is firming despite external headwinds.
Outlook: Pause to Assess Risks
With interest rates already at relatively accommodative levels, economists say BNM has room to pause and evaluate the impact of U.S. tariffs, China’s economic slowdown, and other global risks before considering any additional adjustments.
“BNM is unlikely to rush into further easing,” said one analyst at a regional investment bank. “With inflation contained and growth stabilizing, policymakers are more focused on providing certainty and anchoring market confidence.”
If projections hold, Malaysia could see one of the most prolonged periods of monetary stability in recent history, giving businesses and households greater visibility for planning even as the global economy remains volatile.
