Kuala Lumpur: Bank Negara Malaysia’s (BNM) Monetary Policy Committee (MPC) has maintained the overnight policy rate (OPR) at 3.0 per cent. BNM stated that current indicators suggest ongoing global growth and trade, buoyed by domestic demand and front-loading activities.
According to BERNAMA News Agency, the global growth outlook is expected to be supported by favorable labor market conditions, less restrictive monetary policy, and fiscal stimulus. However, BNM acknowledged that the tariff measures introduced by the United States and subsequent retaliations have dampened the outlook for global growth and trade. The central bank noted that this outlook is subject to uncertainties, including the results of trade negotiations and geopolitical tensions, which could also lead to increased volatility in global financial markets.
Malaysia’s economy expanded in the first quarter, driven by sustained domestic demand and continued export growth. BNM highlighted that while trade tensions and global policy uncertainties may affect the external sector, the demand for electrical and electronic goods and increased tourist spending could mitigate these impacts. Growth is anticipated to be anchored by resilient domestic demand, supported by employment and wage growth, particularly in domestic-oriented sectors, alongside income-related policy measures.
Investment activity is expected to continue growing, bolstered by the progress of multi-year projects in both private and public sectors, high realization of approved investments, and ongoing implementation of catalytic initiatives under national master plans. Despite this, the balance of risks to the growth outlook leans towards the downside, influenced by a potential economic slowdown in major trading partners, diminished sentiment from heightened uncertainties, and lower-than-anticipated commodity production.
Nonetheless, positive trade negotiation outcomes and pro-growth policies in major economies, coupled with robust tourism activities, could enhance Malaysia’s growth prospects. Inflation in the first quarter of 2025 averaged 1.5 per cent for headline inflation and 1.9 per cent for core inflation. BNM anticipates that inflation will remain manageable in 2025, amidst moderate global cost conditions and the absence of excessive domestic demand pressures. Global commodity prices are projected to decline, contributing to these moderate cost conditions.
The impact of announced domestic policy reforms on inflation is expected to be contained. Inflation risks will hinge on the spillover effects of domestic policy measures and external factors such as global commodity prices, financial markets, and trade policies. The ringgit’s performance will be primarily influenced by external factors, while Malaysia’s favorable economic prospects and structural reforms, alongside initiatives to encourage capital flows, will provide enduring support to the currency.
At the current OPR level, the monetary policy stance aligns with the current assessment of inflation and growth prospects. The MPC remains vigilant to ongoing developments and will ensure that monetary policy supports sustainable economic growth amidst price stability.