Last updated on December 25, 2025
KUALA LUMPUR: Bank Negara Malaysia (BNM) is expected to keep the Overnight Policy Rate (OPR) at 2.75% through the remainder of 2025, provided that Malaysia’s economy grows within the official 4.0–4.8% range and inflation remains under control, according to investment banks.
RHB Investment Bank Bhd noted that domestic demand remains resilient despite external headwinds, supported by a healthy labour market, policy measures, and sustained infrastructure and development investments.
“Looking ahead to 2026, we view monetary policy as likely to remain data-dependent, with outcomes hinging on factors such as the impact of tariff policies on Malaysia’s trade performance and the momentum of domestic consumption. Current developments, including signs of easing global tariff and trade tensions, alongside solid domestic demand, do not suggest another OPR cut in 2026,” RHB said in a research note.
Kenanga Investment Bank Bhd shared a similar outlook, expecting no further OPR changes in 2025. However, it cautioned that 2026 could bring volatility due to the lagged impact of higher US tariffs.
“Overall, the latest statement carries a neutral tone. OPR is now at a 29-month low and remains supportive of domestic growth. Transmission to the real economy is still unfolding. Looking into 2026, the policy direction will also hinge on fiscal policy support, with the federal government likely to table a mildly expansionary budget for 2026,” Kenanga said, adding that US policy uncertainty could dominate risks.
It also highlighted Malaysia’s exposure to external shocks, noting that worsening US-China trade frictions or potential US actions targeting BRICS-linked economies could impact growth. Should domestic demand weaken, BNM still has policy space to ease further.
Meanwhile, OCBC Malaysia’s senior ASEAN economist Lavanya Venkateswaran said the bank continues to see room for BNM to lower its policy rate by another 25 basis points (bps).
“The timing of this rate cut, however, is less certain, considering BNM will likely need to see consistently disappointing data to consider further easing. We expect the data for August onward to show some weakness and will monitor the incoming data prints, including August and September trade, August industrial production, wholesale and retail trade, as well as the advance third quarter GDP print, to assess BNM’s next move at its Nov 6 meeting,” she said.
She added that the Budget 2026 announcement on Oct 10, 2025, will also play an important role in shaping the rate outlook.
