Understanding BNM’s Latest OPR Announcement. Why maintain?

Understanding BNM’s Latest OPR Announcement. Why maintain?

Why is the OPR maintained?

BNM is maintaining OPR because growth is continuing globally (we are an export-oriented economy!) and for Malaysia, it seems that Q3 growth is better than expected. This is indeed good news! Means potentially even the EPF returns could be better too. We will see when they announce it and then analysts will start to estimate the potential EPF dividend for this full financial year.

The reason our economy is growing better than expected is because of continuous domestic demand (means people are still spending and buying…), resilient electrical and electronics export (yes, this is one major thing which we send to many countries) and last but not least, we are producing more commodity too. (raw stuffs).

All these positives are expected to continue into 2026 too. In one word, positive. Thus, the current OPR is sufficient to support and we do not need to lower it in order to encourage demand, consumption, business expansion etc. This is why ringgit could be well supported because some other economies have started to lower their interest rates.

Full announcement as follows: Source: https://www.bnm.gov.my/-/monetary-policy-statement-06112025

Monetary Policy Statement

Embargo : Not for publication or broadcast before 1500 on Thursday, 6 November 2025
6 Nov 2025

At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 2.75%.

The latest indicators point towards a continued expansion in global growth. While the impact of higher tariffs would continue to weigh on global growth, the outlook remains supported by resilient labour market conditions, moderating inflation, less restrictive monetary policy and supportive fiscal policy. The conclusion of more trade negotiations has, to some extent, eased global uncertainty. Downside risks remain, arising from potentially higher tariffs, especially product-specific ones, and escalation in geopolitical tensions. Additionally, there are concerns over the elevated valuations in financial markets. Upside potential includes a milder tariff impact on economic activity and pro-growth policies in major economies.

For the Malaysian economy, latest developments indicate better-than-expected growth in the third quarter, driven by sustained domestic demand, resilient electrical and electronics (E&E) exports, and recovery in commodity production. Looking ahead, resilient domestic demand will continue to support growth going into 2026. Employment, wage growth and income-related policy measures will remain supportive of household spending. The expansion in investment activity will be driven by the progress of multi-year projects in both the private and public sectors, the continued high realisation of approved investments, as well as the ongoing implementation of catalytic initiatives under national master plans and the Thirteenth Malaysia Plan (RMK13). Measures under Budget 2026 will also support growth. This growth outlook remains subject to uncertainties, in particular surrounding global developments. Downside risks to the growth outlook remain from slower global trade, weaker sentiment, as well as lower-than-expected commodity production. Meanwhile, upside potential to growth could arise from a better global growth outlook, stronger demand for E&E goods, and robust tourism activity.

Year-to-date, headline and core inflation averaged 1.4% and 1.9%, respectively. Moving forward, headline inflation is expected to remain moderate in 2026 amid the continued easing in global cost conditions. Global commodity prices are expected to remain modest, contributing to contained domestic cost conditions. Meanwhile, core inflation in 2026 is expected to remain stable and close to its long-term average, reflecting continued expansion in economic activity and the absence of excessive demand pressures. In this environment, the overall impact of the implemented domestic policy reforms on inflation in 2026 is expected to be limited.

At the current OPR level, the MPC considers the monetary policy stance to be appropriate and supportive of the economy amid price stability. The MPC will continue to monitor ongoing developments and assess the balance of risks surrounding the outlook for domestic growth and inflation.

The meeting also approved the schedule of MPC meetings for 2026. In accordance with the Central Bank of Malaysia Act 2009, the MPC will convene six times during the year. The Monetary Policy Statement will be released at 3:00 p.m. after each MPC meeting.

— end of media release —

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