Will Bank Negara keep the OPR at 2.75% on Thursday?

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Bank Negara Malaysia Expected to Maintain Overnight Policy Rate at 2.75%

Economists widely anticipate that Bank Negara Malaysia (BNM) will hold its Overnight Policy Rate (OPR) steady at 2.75 per cent when the Monetary Policy Committee (MPC) convenes on Thursday. This expectation is underpinned by a combination of resilient export performance, moderate domestic demand, and a manageable inflationary outlook. Following pre-emptive easing measures implemented last year, the current policy stance is considered appropriate for fostering respectable economic growth in the latter half of 2026.
Resilient External Sector Bolsters Economic Stability

Malaysia's well-diversified external sector has significantly contributed to the nation's economic resilience, as evidenced by robust export growth. In May 2026, exports saw a substantial year-on-year increase of 45.3 per cent. This expansion was largely driven by notable growth in the electrical and electronic sector, which rose by 70.5 per cent, and a remarkable 111 per cent surge in liquefied natural gas exports. Furthermore, an increase in exports of information and communication technology services helped widen the services account surplus, contributing to a current account surplus of 3.0 per cent of GDP in the first quarter of 2026.
Moderate Domestic Demand and Inflationary Considerations

Despite strong external performance, domestic demand indicators suggest a more moderate pace. Private consumption grew by 4.7 per cent in the first quarter of 2026, which is below the historical average of 6.0 per cent. Additionally, the unemployment rate saw a slight increase to 3.0 per cent in April from 2.9 per cent previously. While headline inflation reached 2.0 per cent in May, the highest in nearly two years, economists believe inflationary risks remain manageable. There is a prevailing view that BNM is likely to look past temporary energy price shocks, assessing their impact on underlying inflation and economic growth rather than making immediate policy adjustments.
Limited Urgency for Policy Rate Adjustments

Analysts suggest that there is no immediate imperative for BNM to alter its monetary policy. A significant adjustment is not anticipated unless major global central banks, such as the US Federal Reserve, implement cumulative interest rate changes exceeding 0.5 per cent. The current policy rate is seen as appropriate, especially in light of previous easing measures. The OPR is therefore projected to remain at its current level for the remainder of the year, particularly if the US Federal Reserve also maintains its policy rate, allowing Malaysia's trade momentum to continue supporting economic activity.
Potential for Rate Hike Under Specific Conditions

While the base case anticipates an unchanged OPR throughout 2026, a scenario exists where BNM might consider a rate hike. This could occur if economic growth significantly exceeds current expectations, potentially prompting a 25-basis point increase to 3.0 per cent at either the September or November MPC meetings. Such a move would likely be a response to unexpectedly robust economic activity or a sustained rise in oil prices that exerts upward pressure on inflation. The price of oil, in particular, is identified as a key factor that could influence BNM's decision if it persistently feeds into inflationary pressures.

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Will Bank Negara keep the OPR at 2.75% on Thursday?

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