Malaysia: Bank Negara Malaysia stands pat in November
Bank keeps rates stable for ninth consecutive meeting: At its meeting on 5–6 November, the Monetary Policy Committee of Bank Negara Malaysia (BNM) decided to maintain the Overnight Policy Rate (OPR) at 3.00%, marking the ninth consecutive hold. The decision matched market expectations.
Tame inflation and a robust growth outlook support hold: The key domestic factors influencing the Central Bank’s decision included inflation, which remains modest at an average of 1.8% year-to-date and is expected to stay manageable into 2025. Additionally, the economy’s growth outlook remains upbeat amid resilient domestic expenditure, higher export activity and robust investment. Lastly, the recent depreciation of the ringgit amid uncertainty surrounding the U.S. presidential elections prevented the Bank from pivoting.
Rates likely to remain stable in the coming years: The BNM did not provide explicit forward guidance in its press release, but the majority of our panelists see the policy rate remaining at 3.00% until at least 2028. Depreciatory pressures on the ringgit could intensify following Donald Trump’s re-election in early November, and financial market volatility plus protectionist U.S. policies could pressure the BNM to keep monetary conditions tight for longer. Weaker-than-expected GDP growth is a downside risk.
The next policy meeting is scheduled for 22 January.
Panelist insight: United Overseas Bank analysts Julia Goh and Loke Siew Ting commented on the outlook:
“Considering a neutral monetary policy statement (MPS) issued today and lingering downside risks to the growth outlook, we believe that BNM will continue to adopt a cautious approach next year. It is likely to keep the OPR unchanged at 3.00% throughout 2025 that will narrow the negative interest rate differentials with US rates and provide support for MYR.”