Bank Negara Malaysia Holds Overnight Policy Rate at 2.75%

Monetary Policy Committee Maintains Key Rate

Bank Negara Malaysia's (BNM) Monetary Policy Committee (MPC) announced on January 22, 2026, its decision to maintain the Overnight Policy Rate (OPR) at 2.75%. This marks the third consecutive meeting where the central bank has kept the benchmark interest rate unchanged, a move widely anticipated by economists.

The current OPR level is deemed 'appropriate and supportive of the economy amid price stability,' according to the central bank. This stance reflects BNM's commitment to fostering sustainable economic growth while managing inflationary pressures.

Economic Outlook and Rationale

BNM's decision is underpinned by a positive assessment of both global and domestic economic conditions. Global growth in 2025 surpassed expectations, driven by factors such as lower-than-anticipated tariffs, increased artificial intelligence (AI)-led technology spending, and robust fiscal support.

For 2026, the outlook for Malaysia's economy remains resilient, supported by several key pillars:

• Sustained domestic demand
• Moderating inflation
• Robust tech investments
• Supportive fiscal and monetary policies

The central bank noted that Malaysia's economic growth for 2025 is expected to be at the upper end of its forecast range, with this momentum projected to continue into 2026. Preliminary data indicated that the economy grew by 4.9% in 2025.

Inflationary Environment

Regarding inflation, Malaysia experienced an average headline inflation of 1.4% and core inflation of 2.0% in 2025. Looking ahead to 2026, headline inflation is expected to remain moderate due to the continued easing of global cost pressures. Core inflation is also projected to stay stable and close to its long-term average.

Risks and Future Monitoring

Despite the generally positive outlook, BNM acknowledged the presence of downside risks. These include the potential for higher tariffs, further escalation in geopolitical tensions, and heightened volatility in global financial markets. The MPC stated it would 'continue to monitor ongoing developments and assess the balance of risks surrounding the outlook for domestic growth and inflation.'

The OPR was last adjusted in July 2025, when it was lowered from 3.00% to 2.75% as a preemptive measure to safeguard growth amidst global uncertainties. The stability of the OPR has also contributed to the ringgit opening near a five-year high against the US dollar on January 23, 2026.