Malaysia's Central Bank Holds Rate Steady, Cites Resilient Growth—Update

By Ying Xian Wong

KUALA LUMPUR--Malaysia's central bank kept its benchmark interest rate unchanged as expected, citing resilient growth and contained inflation.

Bank Negara Malaysia on Thursday held its overnight policy rate at 2.75%, where it has stood since a 25-basis-point cut in July 2025. The decision matched the forecasts of four out of seven economists polled by The Wall Street Journal.

The central bank expects Malaysia's economy to grow more than 5% in 2026 and remain resilient in 2027, supported by strong exports amid the global technology boom, steady domestic demand and tourism spending.

Measures under Budget 2027 should further support household spending, although prolonged Middle East tensions and lower commodity production pose downside risks, it added.

The central bank expects headline and core inflation to edge higher in 2027 due to geopolitical tensions, elevated commodity prices and adverse weather, but both are expected to remain contained.

"The MPC will remain vigilant to cost pressures and domestic demand conditions given their impact on the inflation outlook," BNM said.

"At the current OPR level, the MPC considers the monetary policy stance to be consistent with the outlook of continued price stability and sustainable economic growth," BNM added.

Economists remain divided over the policy outlook, with some seeing scope for a rate increase next year, while others expect borrowing costs to remain unchanged.

Barclays said the latest monetary policy statement was broadly similar to September's, though it detected a slightly more hawkish tone

Economist Brian Tan now expects BNM to raise its overnight policy rate by 25 basis points to 3.00% in March 2027, reversing last year's rate cut before assessing whether further tightening is needed.

Higher inflation or sustained economic growth could prompt another increase, particularly if prolonged low rates encourage excessive risk-taking, he said. Tan also sees a risk of BNM raising its statutory reserve requirement ratio by 100 basis points to 2.00% in 2027.

In contrast, Capital Economics expects BNM to keep rates unchanged through 2026 and 2027, citing the central bank's view that inflation will remain contained.

Economist Gareth Leather forecasts Malaysia's GDP growth at 6.0% this year.

Write to Ying Xian Wong at yingxian.wong@wsj.com

(END) Dow Jones Newswires

November 05, 2026 03:37 ET (08:37 GMT)