Kuala lumpur: Bank Negara Malaysia (BNM) is expected to maintain the overnight policy rate (OPR) at 2.75 per cent through 2026, supported by manageable inflation and resilient domestic economic conditions, according to Kenanga Investment Bank Bhd (Kenanga IB).

According to BERNAMA News Agency, the investment bank stated that Malaysia's inflation remains contained, but the escalating Middle East conflict could raise energy prices and push inflation higher. They noted that a prolonged disruption in the Strait of Hormuz could revive global inflationary pressures and tighten external financial conditions. However, the domestic pass-through is expected to remain manageable and consistent with BNM's expectation that inflation will stay moderate.

Kenanga IB emphasized that Malaysia continues to face external risks, but from a position of strength, supported by resilient domestic demand and investment activity. As a result, BNM is expected to remain patient and maintain the OPR at 2.75 per cent through 2026.

Kenanga IB is also maintaining its US dollar/ringgit (USD/MYR) year-end 2026 forecast at 3.95, compared with 4.06 in 2025. They highlighted that while the ringgit's medium- to long-term outlook remains supported by Malaysia's resilient external position and a weaker structural outlook for the US dollar, the currency no longer benefits from higher oil prices, making the duration of the conflict a key factor for its performance. They indicated that Brent crude sustaining above US$100 per barrel could lead to a six to nine per cent depreciation pressure on the ringgit due to higher oil prices, compounded by safe-haven demand for the US dollar.

Earlier reports indicated that BNM's international reserves stood at US$128.3 billion as of February 27, 2026. The central bank stated that the reserves position was sufficient to finance 4.7 months of imports of goods and services and was equivalent to 0.9 times the country's total short-term external debt.