BNM likely to keep OPR unchanged at 2.75% until mid-2026 amid global headwinds—analyst

• “I think the central bank wants to wait and see whether the July rate cut will support economic growth. If it does, they’ll be comfortable keeping the rate at 2.75%.”

KUALA LUMPUR (July 22): Bank Negara Malaysia (BNM) is expected to maintain its benchmark interest rate at 2.75% until at least mid-2026, as it stays cautious amid persistent global headwinds, according to a CIMB Bank Bhd analyst.

Speaking at the CIMB Group Asean Media Day on Monday, Ng Boon Hoa, team lead for fixed income at the bank’s Chief Investment Office, said the central bank's recent 25-basis-point rate cut to the overnight policy rate (OPR) in July was a preemptive measure. The move is aimed at buffering the economy against potential volatility and a possible slowdown in growth.

“I believe the central bank recognises the risk of slower growth from potential implementation of the US tariff, as Malaysia has yet to secure a trade deal," Ng said.

"However, this has been largely offset by the strong economic performance we’ve seen recently," he said, suggesting the central bank might be taking some comfort in the economy's recent strength.

Ng further added, “I think the central bank wants to wait and see whether the July rate cut will support economic growth. If it does, they’ll be comfortable keeping the rate at 2.75%.”

He also observed that BNM’s policy rates are generally less volatile compared to those of other central banks, noting that the central bank "tends to be quite preemptive".

On July 9, BNM reduced the OPR by 25 basis points — its first rate adjustment in nearly two years — amid concerns about growth risks following the sudden announcement of a 25% US import tariff on all Malaysian goods.

That rate cut followed an earlier move by BNM to reduce the statutory reserve requirement (SRR) — the amount of cash banks must hold in reserve — to its lowest level in 14 years, effective May. This earlier measure was intended to boost liquidity in the banking system.