PETALING JAYA: Bank Negara Malaysia’s (BNM) Monetary Policy Committee (MPC) has maintained the overnight policy rate (OPR) at 2.75%, a move widely anticipated by the market.

In a statement, the central bank said the current level remained “appropriate and supportive of the economy amid price stability,” following a 25-basis-point cut at its previous meeting on July 9.

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

Malaysia’s economy expanded 4.4% in the first half of 2025, underpinned by household spending and investment activity.

BNM said growth remained on track to hit its 4% to 4.8% target for the year.

Looking to 2026, the central bank said growth will continue to be supported by domestic demand.

“Employment, wage growth and income-related policy measures will remain supportive of household spending,” it said, adding that investment activity will be boosted by progress on multi-year projects, the continued realisation of approved investments and the implementation of catalytic initiatives under the national master plans and the 13th Malaysia Plan (13MP).

However, the central bank cautioned that risks “in particular surrounding global developments” remained, citing weaker global trade, lower commodity output and softer sentiment.

Still, favourable trade negotiations, robust tourism and sustained demand for electrical and electronic goods could bolster exports and growth prospects, it added.

On the global front, BNM noted that “the latest indicators point towards continued expansion in global growth, supported by sustained consumer spending and front-loading activities.”

It said the conclusion of many trade negotiations had “to some extent” eased uncertainty, while labour market strength, less restrictive monetary policy and fiscal stimulus are expected to underpin the outlook.

“Nonetheless, trade policy developments are still expected to weigh on global growth going forward, as announced tariff rates take effect and the frontloading activity dissipates,” the central bank warned.

BNM said downside risks also lingered from potentially higher tariffs, particularly product-specific ones, and escalating geopolitical tensions, which could heighten volatility in global financial markets and commodity prices.

Still, the central bank highlighted that favourable outcomes from remaining US trade negotiations and pro-growth policies in major economies presented upside potential.

Domestically, headline and core inflation averaged 1.4% and 1.9%, respectively, in the first seven months of 2025.

BNM expects headline inflation for 2025 and 2026 to remain moderate “amid contained global cost conditions,” with the easing trend in global commodity prices contributing to lower domestic cost pressures.

Core inflation is projected to stay stable and close to the long-term average, reflecting continued economic expansion and the absence of excessive demand pressures and BNM said this trend is expected to persist into 2026.

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

The MPC, chaired by governor Datuk Seri Abdul Rasheed Ghaffour, held its fifth meeting yesterday and will convene for its sixth and final meeting of the year on Nov 6.