Malaysia keeps overnight policy rate at 2.75 per cent

Bank Negara Malaysia left its overnight policy rate unchanged at 2.75 per cent following the last Monetary Policy Committee meeting of 2026, saying the rate remained appropriate to support sustainable growth and price stability.

The central bank forecast growth above five per cent for 2026 after recent indicators pointed to continued momentum during the third quarter. It attributed that performance to strong exports and sustained domestic demand.

For 2027, the bank expects the external sector to remain an important source of growth, helped by spending on tourism and the global technology upcycle. Continued investment and stable labour market conditions are expected to support domestic demand, while 2027 Budget measures could provide an additional lift to private consumption.

A prolonged Middle East conflict and lower commodity production pose downside risks to Malaysia’s growth outlook, the bank said. Stronger-than-expected global growth, technology export demand and tourism activity could produce a better outcome.

Headline inflation has averaged 1.8 per cent so far this year, compared with 1.9 per cent for core inflation. Bank Negara expects both measures to rise slightly in 2027, citing geopolitical uncertainty, higher global commodity prices and adverse weather. It nevertheless expects inflation to remain contained, supported by domestic policy measures and stable demand.

The bank said higher energy costs had lifted global inflation, with businesses passing increased costs to consumers expected to keep it elevated. The MPC will monitor evolving conditions and assess what they mean for risks to domestic inflation and growth.