“At the current OPR level, the monetary policy stance is consistent with the current assessment of inflation and growth prospects,” BNM said in a statement. “Recognising that there are downside risks in the economic environment, the MPC remains vigilant to ongoing developments to inform the assessment on the domestic inflation and growth outlook.”
BNM said it will ensure the monetary policy stance remains conducive to sustainable economic growth amid price stability.The ringgit barely reacted to the rate decision, holding a 1% drop.
Malaysia’s ongoing negotiations with the US provide space for BNM to be patient and assess the likely fallout of the global trade war. The government is seeking to bring the threatened 24% tariffs down to zero.
Analysts and investors alike increasingly expect BNM to cut rates this year, with the government signaling it could lower its 4.5% to 5.5% economic growth projection. Other central banks across the region have begun easing to support their economies before the 90-day tariff pause is over.
“Overall, the balance of risks to the growth outlook is tilted to the downside, stemming mainly from a deeper economic slowdown in major trading partners, weaker sentiment amid higher uncertainties affecting spending and investments, as well as lower-than-expected commodity production,” BNM said. “Meanwhile, favorable trade negotiation outcomes and pro-growth policies in major economies, as well as more robust tourism activity could raise Malaysia’s growth prospects.”
