Kuala Lumpur: Bank Negara Malaysia’s (BNM) decision to maintain the overnight policy rate (OPR) at 3.00 per cent during the March 2025 monetary policy meeting is broadly expected, emphasising the current conducive policy stance to sustain economic growth.

According to BERNAMA News Agency, MIDF Amanah Investment Bank Bhd stated that this decision aligns with the current assessment of economic growth and inflation, anticipating that both domestic and external demand will drive growth. Despite external uncertainties, economic activity strength is projected to persist in 2025, supported by domestic demand. Elements such as employment and wage growth, along with policy measures like the upward revision of the minimum wage and civil servant salaries, are expected to bolster household spending.

MIDF also noted that while Malaysia’s economic fundamentals remain robust, rising costs and policy changes could pose constraints on demand through increased inflation. The bank highlighted that although inflation is predicted to rise due to supply-side pressures like policy adjustments and escalating costs, it is expected to ‘remain contained.’

Furthermore, MIDF emphasized BNM’s policy flexibility to address future economic uncertainties, particularly those arising from domestic economic conditions and the changing inflation outlook in Malaysia. However, the developing trade war between the US and its trading partners, leading to rising protectionism, poses potential risks to the global economy. MIDF warned that further fragmentation could heighten trade tensions, potentially causing a global slowdown that might affect the OPR’s trajectory.

RHB Investment Bank Bhd shared similar sentiments, expecting the OPR to stay at 3.00 per cent throughout the year, assuming economic prospects remain ‘steady’ and inflation pressure is ‘manageable.’ The trajectory of the OPR will be influenced by three primary factors: Malaysia’s economic momentum, the inflation trajectory, and to a lesser extent, global interest rates.

Inflationary risks are anticipated to remain subdued presently, but the inflation trajectory will depend on various factors, including subsidy retargeting measures, the expansion scope of the sales and service tax, household income and demand, and global commodity prices.