Kuala lumpur: The Monetary Policy Committee (MPC) of Bank Negara Malaysia (BNM) has decided to reduce the Overnight Policy Rate (OPR) by 25 basis points as a pre-emptive measure to maintain a steady growth path. Bank Negara Malaysia Governor Datuk Seri Abdul Rasheed Ghaffour emphasized that this decision is in line with the mandate to sustain price stability conducive to growth, despite uncertainties in global trade and geopolitical developments.
According to BERNAMA News Agency, Governor Abdul Rasheed clarified that the OPR cut is not directly related to the recent United States tariffs but is aimed at preserving Malaysia’s economic growth. The economy showed expansion in the second quarter, driven by domestic demand and export growth. Future growth is expected to be supported by domestic demand, employment and wage growth, policy measures, and lower borrowing costs resulting from the OPR cut.
The Governor also highlighted the role of continued investment activities, multi-year projects, and favorable trade negotiations in bolstering Malaysia’s economy. However, he acknowledged that risks to growth remain due to slower global trade and weaker sentiment. The GDP growth forecast for 2025 will be updated to reflect the latest economic conditions, though significant revisions are not anticipated.
On the topic of inflation, headline and core inflation rates averaged 1.4% and 1.9% respectively in the first five months of the year. Inflation is expected to stay moderate in 2025, with limited pressure from global commodity prices. The impact of domestic policy reforms on inflation is expected to be contained.
Addressing the possibility of further OPR cuts, the Governor stated that monetary policy decisions will continue to be based on assessments of growth and inflation, with no predetermined course. The current cut is seen as a precautionary step amidst global uncertainties.
Governor Abdul Rasheed underscored the importance of structural reforms in enhancing economic resilience. Recent adjustments, such as the SST expansion and rationalization of fuel subsidies, are part of efforts to improve fiscal space and public spending efficiency. National strategies like the New Industrial Master Plan and the National Energy Transition Roadmap are expected to support investments and productivity growth.
Despite global uncertainties, Malaysia’s strong economic fundamentals and supportive government policies remain attractive to investors, ensuring sustained investment activity, particularly in domestic sectors. The Governor reaffirmed the country’s commitment to maintaining its position as a favorable investment destination.