Bank Negara Malaysia is expected to keep its overnight policy rate at 2.75% at Thursday’s final meeting of the year, according to 17 of 23 Bloomberg‑surveyed economists. Six analysts predict a 25‑basis‑point rise. Low inflation and robust growth—fueled by private consumption, strong investment, and surging electronics exports—allow the central bank to pause for now. HSBC economists Yun Liu and Madhurima Nag note that BNM will likely revert to normalization early in 2027, with a 25‑basis‑point hike projected for Q1. Despite higher global oil prices from Middle‑East tensions, Malaysia’s subsidies keep fuel costs low, and its net‑energy‑exporter status shields it from import pressures. The ringgit remains stable, while regional peers have weakened. Consumer prices rose 1.8% year‑on‑year in September, within the 1.5‑2.5% target, but inflation is expected to rise toward 2.5% in Q3 2027. GDP grew 5.3% in Q3 and 5.5% in the first nine months of 2026, prompting the government to lift its 2026 forecast to 4.8‑5.3%. CIMB Bank’s Chew Khai Yen and Michelle Chia forecast a March 2027 OPR increase to 3%, citing rising core inflation.
Key risks include a potential oil shock that could limit subsidy capacity and trigger second‑round inflation. BNM Governor Abdul Rasheed Ghaffour has signaled greater flexibility after revising policy guidance in September, standing ready to act if price pressures intensify. The central bank’s cautious stance balances strong growth with moderate inflation, positioning Malaysia for a measured rate hike next year.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing