Malaysia Central Bank Holds Key Rate at 2.75%

Malaysia's central bank, Bank Negara Malaysia (BNM), has held its benchmark overnight policy rate steady at 2.75%, a decision widely expected by economists amid soft inflation and resilient economic growth. The rate cut in July, the first in five years, was seen as a pre-emptive move to support growth rather than the start of an easing cycle, with the central bank expected to maintain current rates through 2027 while closely monitoring economic data and the impact of a 19% US tariff on Malaysian exports. Inflation remains low at 1.2%, below BNM’s forecast range for 2025, and GDP growth accelerated to 2.1% quarter-on-quarter, supporting the case for steady rates. Economists note that despite external risks, domestic demand remains strong, supported by a robust labor market, policy measures, and infrastructure investments. While some analysts acknowledge a non-negligible risk of another rate cut later in the year, the consensus favors a pause to assess the full impact of global trade uncertainties before making further adjustments. Overall, the central bank appears to be balancing accommodative monetary policy with caution amid ongoing global and domestic economic challenges.