BNM Cuts OPR By 25 Bps To 2.75 Pct

KUALA LUMPUR, July 9 (Bernama) -- Bank Negara Malaysia’s (BNM) Monetary Policy Committee (MPC) has reduced the Overnight Policy Rate (OPR) by 25 basis points to 2.75 per cent today. 

BNM said the ceiling and floor rates of the corridor of the OPR are correspondingly reduced to three per cent and 2.5 per cent, respectively.

“The latest indicators point towards continued expansion in global growth, supported by sustained consumer spending and to some extent, front-loading activities.

“The global growth outlook would remain supported by positive labour market conditions, less restrictive monetary policy and fiscal stimulus,” it said in a statement today.

BNM last kept the OPR at 2.75 per cent in March 2023. It was increased to three per cent in May 2023.

The central bank said uncertainties surrounding tariff developments, geopolitical tensions, which have led to greater volatility in global financial markets, and commodity prices are weighing on the outlook.

“For Malaysia, the latest developments point towards continued growth in economic activity in the second quarter, underpinned by sustained domestic demand and export growth,” BNM said, adding that resilient domestic demand growth.

Meanwhile, BNM said employment and wage growth, particularly within domestic-oriented sectors, and income-related policy measures, will support household spending.

“The expansion in investment activity will be sustained by the progress of multi-year projects in private and public sectors, the continued high realisation of approved investments, and the ongoing implementation of catalytic initiatives under the national master plans,” it said.

The central bank said favourable trade negotiation outcomes, pro-growth policies in major economies, continued demand for electrical and electronic goods, and robust tourism activity could raise Malaysia’s export prospects.

“However, the balance of risks to the growth outlook remains tilted to the downside, stemming mainly from a slower global trade, weaker sentiment, as well as lower-than-expected commodity production,” it said. 

Malaysia’s headline and core inflation averaged 1.4 per cent and 1.9 per cent in the first five months of the year, respectively.

“Overall, inflation in 2025 is expected to remain moderate, amid contained global cost conditions and the absence of excessive domestic demand pressures,” it added. 

It said inflationary pressure from global commodity prices is expected to remain limited, contributing to moderate domestic cost conditions.

“In this environment, the overall impact of the announced and upcoming domestic policy reforms on inflation is expected to be contained,” it said.

BNM said the ringgit’s performance will continue to be primarily driven by external factors. Malaysia's favourable economic prospects and domestic structural reforms, complemented by ongoing initiatives to encourage flows, will continue to provide enduring support to the ringgit.

“While the domestic economy is on a strong footing, uncertainties surrounding external developments could affect Malaysia’s growth prospects,” it said. 

BNM emphasised that the reduction in the OPR is a pre-emptive measure to preserve Malaysia’s steady growth path amid moderate inflation prospects.

“The MPC will continue to remain vigilant to ongoing developments and assess the balance of risks surrounding the outlook for domestic growth and inflation,” it added. 

-- BERNAMA