BNM Keeps OPR Steady At 2.75 Pct As Supportive Policy Stance Continues -- Economists
By Zufazlin Baharuddin
KUALA LUMPUR, March 5 (Bernama) -- Bank Negara Malaysia’s decision to keep the Overnight Policy Rate (OPR) steady at 2.75 per cent reflects a policy stance that remains supportive in the face of an increasingly uncertain external environment.
MARC Ratings Bhd chief economist Dr Ray Choy said the Malaysian economy is equipped to face these external challenges from a position of strength as economic activity has continued to expand at a healthy pace, while inflation is mild.
“The external environment remains the dominant source of uncertainty, particularly through channels such as geopolitical and geoeconomic positioning, energy prices, global financial conditions and trade dynamics.
“Even without a change in the policy rate, these factors can influence domestic financial conditions through the exchange rate, funding costs and expectations,” he told Bernama.
The central bank decided to maintain the OPR at 2.75 per cent at today’s second of six Monetary Policy Committee meetings for 2026.
Besides, MBSB Research chief economist Abdul Mui'zz Morhalim believes there is no pressure for BNM to adjust OPR in view of the resilience in Malaysia’s economic growth, supported by firm domestic demand and electric and electronics (E&E) exports.
“Inflation also remains relatively stable, suggesting the current monetary policy stance remains appropriate for now,” he said.
Commenting on the impact of the OPR decision in the wake of the Middle East conflict, he said geopolitical conflicts are unlikely to directly influence BNM’s policy decision at this stage.
“However, if the conflict significantly weakens the global economic outlook, BNM could consider easing the OPR to support domestic growth, particularly if slower demand adversely affects Malaysia’s labour market and domestic demand,” he said.
Abdul Mui'zz said Malaysia’s economic fundamentals remain positive, supported by among others steady domestic demand, stable financial conditions and an improving fiscal position.
“These fundamentals, together with stronger tourism activity under Visit Malaysia 2026, should help cushion the economy against external uncertainties recently heightened by the escalation in geopolitical risks in the Middle East,” he said.
Meanwhile, Choy opined that the Middle East war has widened and is extending beyond initial expectations.
Airspace closures and disruptions to the Strait of Hormuz passage have led to spikes in logistics costs, insurance premiums, commodity and oil prices.
He said this would lead to higher inflation and dampen consumer sentiment, although the impact on Malaysia will be moderated by existing subsidies and controls on fuel and food prices.
“Geopolitical costs have increased, including further escalation of the Middle East conflict, the involvement of opportunistic militant groups, and the targeting of both military and civilian infrastructure such as desalination plants.
“OPR decisions will likely remain data-dependent and supportive to the domestic economy,” Choy added.
-- BERNAMA