
Bank Negara Malaysia (BNM) has reduced the Overnight Policy Rate (OPR) by 25 basis points to 2.75%, marking its first rate cut in over a year. The central bank said the move is a proactive measure to support the country’s economic growth amid external uncertainties and moderate inflation.
Following the decision, the ceiling and floor rates of the OPR corridor are adjusted to 3.00% and 2.50%, respectively.
BNM’s Monetary Policy Committee (MPC), in a statement released today, said that while Malaysia’s economy remains resilient, downside risks from global developments could pose challenges to the country’s growth momentum.
“The reduction in the OPR is a pre-emptive measure aimed at preserving Malaysia’s steady growth path amid moderate inflation prospects,” the statement said.
Domestic Outlook Remains Positive
The central bank remains optimistic about Malaysia’s economic outlook, pointing to continued expansion in the second quarter, fuelled by strong domestic demand and sustained export performance. Growth is expected to be driven by robust household spending, supported by favourable labour market conditions, rising wages, and targeted income-related policies.
Investment activity is also forecast to remain healthy, buoyed by progress in long-term infrastructure and private sector projects, as well as the execution of key national initiatives.
Global Headwinds Persist
Despite the positive domestic indicators, BNM flagged persistent global uncertainties—including geopolitical tensions and trade policy developments—that could trigger volatility in global markets and weigh on commodity prices.
While global growth is supported by consumer spending and easing monetary conditions, the central bank noted that external risks could dampen sentiment and slow global trade.
Inflation Remains Contained
Inflationary pressures in Malaysia are expected to stay moderate. Headline and core inflation averaged 1.4% and 1.9%, respectively, during the first five months of 2025. The central bank cited subdued global cost conditions and manageable domestic demand as contributing factors to the stable inflation outlook.
BNM added that the impact of upcoming domestic policy reforms on prices is expected to be contained, reducing the risk of a sharp uptick in inflation.
Ringgit Influenced by External Forces
The ringgit’s performance, BNM noted, will continue to be shaped by external factors. Nonetheless, the currency will remain supported by Malaysia’s sound economic fundamentals, structural reforms, and initiatives aimed at encouraging capital inflows.
The central bank concluded by reaffirming its commitment to monitoring developments closely and said the MPC will continue to assess the balance of risks surrounding the domestic growth and inflation outlook.