Last updated on December 25, 2025
KUALA LUMPUR: Bank Negara Malaysia’s (BNM) Monetary Policy Committee (MPC) has chosen stability over surprises, holding the overnight policy rate (OPR) steady at 2.75%, even as global growth signals remain cautiously positive.
The decision signals a central bank in wait-and-watch mode — balancing Malaysia’s steady growth trajectory against a world economy still shadowed by tariffs, trade risks and geopolitical tensions.
BNM noted that global growth continues to expand, supported by consumer spending, favourable labour markets, and fiscal stimulus. The conclusion of several trade negotiations has also eased uncertainty, offering some relief to exporters and markets.
Yet, the central bank warned of lingering risks.
“These lingering uncertainties could lead to greater volatility in the global financial markets and commodity prices,” it said in its statement.
Domestic Growth Outlook: 2025 and Beyond
Malaysia’s economy expanded 4.4% in the first half of 2025, keeping it on track for 4.0%–4.8% growth this year. Looking to 2026, BNM expects resilient domestic demand, rising wages, and ongoing investment projects to remain the backbone of expansion.
The central bank highlighted the progress of multi-year infrastructure projects, realisation of approved investments, and catalytic initiatives under the 13th Malaysia Plan (13MP) as drivers of future activity.
Inflation Picture: Comfortably Contained
Inflation pressures remain muted. Headline inflation averaged 1.4% in the first seven months of 2025, with core inflation at 1.9%. Both are expected to stay moderate in 2025 and 2026, reflecting stable commodity prices and the absence of demand-driven overheating.
“Core inflation is expected to remain stable and close to the long-term average, reflecting continued expansion in economic activity and the absence of excessive demand pressures,” BNM said.
At 2.75%, the OPR is neither stimulative nor restrictive, a middle ground that allows the central bank room to manoeuvre if global headwinds intensify. Investors see the pause as a signal that BNM is prioritising stability and confidence over aggressive tightening.
Still, risks loom. A slowdown in global trade, weaker commodity production, or escalating geopolitical conflicts could tip the balance. On the upside, stronger exports of electrical and electronic goods, robust tourism, and positive outcomes from US trade negotiations could provide Malaysia with a growth lift.
BNM summed it up:
“The MPC will continue to monitor ongoing developments and assess the balance of risks surrounding the outlook for domestic growth and inflation.”
