KUALA LUMPUR - Bank Negara Malaysia’s (BNM) decision to maintain the Overnight Policy Rate (OPR) at 2.75 per cent on Thursday reinforced expectations that the central bank will likely hold the rate throughout 2026, although investment banks and research houses caution that prolonged geopolitical tensions and higher oil prices could still alter the inflation outlook.
HSBC Global Research said BNM made a subtle but notable change in its statement by describing the monetary policy stance as "consistent” with the current outlook instead of "supportive”, although it maintained that the central bank would likely keep rates unchanged through 2026.
HSBC senior Asean economist Yun Liu said BNM also shifted its inflation language, expecting inflation "to edge higher” rather than "to remain moderate”, reflecting emerging concerns over domestic cost pressures stemming from elevated global commodity prices.
"Malaysia is in a more resilient footing than peers, as it is a net energy exporter. This is not to say Malaysia will be insulated from the energy shock, but the impact should be smaller than on other Asian economies,” she said.
RHB Investment Bank Bhd said monetary policy would remain data-dependent, guided mainly by growth prospects and inflation trends, while robust economic fundamentals and manageable inflation continued to support a broadly stable policy stance.
However, it said that escalating geopolitical tensions could push global energy prices higher, adding that a 25-basis-point rate hike could not be ruled out should inflation exceed BNM’s official forecast range of 1.5 per cent to 2.5 per cent and remain persistent.
The investment bank said it maintained its 2026 gross domestic product (GDP) growth forecast at 4.7 per cent, but estimated that a sustained rise in oil prices to US$140 per barrel could shave between 0.5 and one percentage point off Malaysia’s growth outlook.
Meanwhile, CIMB Treasury and Markets Research said BNM’s latest statement contained a more explicit acknowledgement that energy price spikes and supply chain disruptions from the West Asia conflict were already "beginning to weigh on global growth momentum”.
It said the central bank still viewed current inflation pressures as largely supply-driven and transitory, reinforcing expectations for an extended OPR hold rather than pre-emptive tightening.
CIMB also noted that Malaysia’s direct trade exposure to Gulf Cooperation Council countries, Iran and Iraq remained modest at around 1.5 to 2.0 per cent of total exports, suggesting the broader impact would come mainly through commodity prices and global demand trends rather than direct trade disruptions.
It said Malaysia’s electrical and electronics exports continued to benefit from the ongoing artificial intelligence-driven semiconductor upcycle, although risks remained from supply shortages and potential United States tariff measures on semiconductors.
MBSB Investment Bank Bhd also retained its expectation for an extended OPR pause this year, underpinned by resilient domestic growth, healthy labour market conditions, continued investment activity and sustained demand for electric and electronics exports.
However, it said that prolonged geopolitical conflicts could keep global energy prices elevated, potentially reinforcing a "higher-for-longer” inflationary outlook for the remainder of the year.
"Hence, government policy measures, particularly fuel subsidies and targeted interventions, will be crucial in containing the potential uptick in inflationary pressures,” it said.
BNM kept the OPR unchanged at 2.75 per cent for the sixth consecutive Monetary Policy Committee meeting since the 25-basis-point cut in July 2025. - BERNAMA