Malaysia’s central bank holds rate for sixth straight meeting amid steady growth

[KUALA LUMPUR] Malaysia’s central bank kept its benchmark interest rate steady for the sixth straight policy meeting on Thursday (Jul 9), as expected, amid moderate inflation and sustained economic growth.

Bank Negara Malaysia (BNM) maintained its overnight policy rate at 2.75 per cent, as had been forecast by all but one of 31 economists surveyed in a Reuters poll.

“Malaysia’s strong fundamentals will continue to underpin the economy’s resilience against external shocks,” BNM said in a statement, saying it expected data to show resilient second-quarter growth due to domestic demand and stronger-than-expected exports.

Ongoing uncertainties surrounding the Middle East conflict and lower commodity production may affect the outlook, but household spending will likely remain supported by government policies, employment and wage growth, and continued investment activity, BNM said.

Economic growth in 2026 was expected to be within the central bank’s forecast range of between 4 per cent and 5 per cent, BNM said, easing from 5.2 per cent growth in 2025.

Gross domestic product rose a stronger-than-expected 5.4 per cent in the first quarter from Q1 2025 as robust domestic demand offset shocks arising from the Middle East crisis.

Headline and core inflation averaged 1.7 per cent and 2.1 per cent respectively in the first five months of the year, broadly within expectations, BNM said.

Elevated commodity prices were expected to exert upward pressure on prices, but the impact on inflation was nevertheless projected to remain contained, it added.

“At the current OPR level, the MPC considers the monetary policy stance to be appropriate and consistent with the outlook of continued price stability and sustainable economic growth,” BNM said, referring to its monetary policy committee.

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A majority of economists polled by Reuters forecast no change to the policy rate for the rest of 2026, with just five of the 29 who provided forecasts expecting a 25 basis point hike to 3 per cent by the end of 2026.

The last change in the policy rate was a cut in July 2025. REUTERS