BNM keeps overnight policy rate unchanged as widely expected amid resilient economy, tame inflation

• The policy rate has remained unchanged since July when BNM sprang a surprise with a 25-basis-point reduction in what the central bank described as a “pre-emptive measure” to support economic growth.

KUALA LUMPUR (Nov 6): Malaysia’s central bank kept the benchmark interest rate unchanged as expected on Thursday, drawing comfort from resilient economic growth and tame inflation.

The overnight policy rate remains unchanged at 2.75%, Bank Negara Malaysia (BNM) said in a statement following its sixth and final monetary policy review for the year. The decision was correctly predicted by all economists in a Bloomberg poll.

The current rate remains appropriate and supportive of the economy amid price stability, the central bank said.

The policy rate has remained unchanged since July when BNM sprang a surprise with a 25-basis-point reduction in what the central bank described as a “pre-emptive measure” to support economic growth.

The economy has expanded stronger than expected in the recently ended quarter, driven by sustained household demand, robust electronics exports, and recovering commodity output.

Looking ahead, BNM expects resilient domestic demand to anchor expansion into 2026, supported by employment gains, wage growth, and income-related policy measures.

Investment activity is also set to strengthen on the back of multi-year projects in both private and public sectors, realisation of approved investments, and initiatives under various national master plans and the 13th Malaysia Plan. The momentum will be reinforced by Budget 2026 measures.

Upside potential could come from stronger global growth, firmer demand for electronics, and robust tourism activity. Still, the central bank remains cautious of external downside risks, including slower trade, weaker sentiment, and softer commodity production.

Malaysia’s economy is expected to expand steadily at 4.0%-4.5% in 2026 versus 4.0%-4.8% this year, according to official forecasts.

Inflation, meanwhile, remains contained. BNM expects headline inflation to stay moderate in 2026 amid easing global cost conditions, while core inflation should remain stable near its long-term average, reflecting steady economic expansion without excessive demand pressures.

The impact of domestic policy reforms on inflation would be “limited” in 2026, the central bank added.

BNM’s next monetary policy meeting is on Jan 22, 2026.

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