Kuala lumpur: Bank Negara Malaysia's decision to maintain the Overnight Policy Rate (OPR) at 2.75 percent underscores a supportive policy stance amid an increasingly uncertain global environment.

According to BERNAMA News Agency, MARC Ratings Bhd chief economist Dr. Ray Choy noted that Malaysia's economy is well-positioned to handle external challenges, given its healthy economic expansion and mild inflation.

Choy highlighted that the external environment continues to be a major source of uncertainty, influenced by geopolitical and geoeconomic factors, energy prices, global financial conditions, and trade dynamics. He emphasized that even without a change in the policy rate, these factors could affect domestic financial conditions through exchange rates, funding costs, and expectations.

The central bank's decision to keep the OPR unchanged was made during the second of six Monetary Policy Committee meetings for 2026. MBSB Research chief economist Abdul Mui'zz Morhalim indicated that there is no immediate pressure for BNM to adjust the OPR due to the resilience of Malaysia's economic growth, driven by strong domestic demand and exports in the electric and electronics sector.

Morhalim pointed out that inflation remains stable, suggesting that the current monetary policy stance is appropriate for the time being. He also commented on the potential impact of the Middle East conflict on BNM's policy decisions, stating that while current geopolitical tensions are unlikely to directly influence the central bank's actions, a significant weakening of the global economic outlook could prompt BNM to consider easing the OPR to support domestic growth.

Morhalim further noted that Malaysia's economic fundamentals remain robust, bolstered by steady domestic demand, stable financial conditions, and an improving fiscal position. He mentioned that these factors, along with increased tourism activity under Visit Malaysia 2026, should help mitigate the effects of external uncertainties exacerbated by geopolitical risks in the Middle East.

Meanwhile, Choy expressed that the Middle East conflict has expanded beyond initial expectations, impacting logistics costs, insurance premiums, and commodity and oil prices due to airspace closures and disruptions in the Strait of Hormuz. He remarked that while these developments could raise inflation and dampen consumer sentiment, their impact on Malaysia will be cushioned by existing subsidies and controls on fuel and food prices.

Choy concluded that the costs associated with geopolitical tensions have risen, with further escalation of the Middle East conflict involving opportunistic militant groups and targeting of infrastructure. He reiterated that future OPR decisions will likely be data-dependent and remain supportive of the domestic economy.