Bank Negara Cuts OPR By 25 Base Points To 2.75%
Bank Negara Malaysia (BNM) has cut the overnight policy rate (OPR) by 25 base points. The OPR rate, which is the benchmark for the country’s loan and deposit rates, now stands at 2.75 percent.
This is the first time in over two years that the central bank has made changes to its policy and aligns with current market expectations.
First rate cut since May 2023
The central bank has kept the benchmark at 3.00 percent for 12 consecutive months since May 2023. This was done with the intention of supporting economic growth and managing inflation risks. The decision to cut the OPR was made during Bank Negara’s fourth Monetary Policy Committee (MPC) meeting of the year.
According to a recently released statement by BNM, the latest indicators point towards continued expansion in global growth, supported by sustained consumer spending and to some extent, front-loading activities.
The statement also mentions that the global growth outlook would remain supported by positive labour market conditions, less restrictive monetary policy and fiscal stimulus. However, the global outlook is clouded by tariff uncertainties, geopolitical tensions, and volatility in commodity prices and financial markets.
Despite the many challenges, the statement notes that Malaysia’s economic activity remains on firm footing – mostly being driven by robust domestic demand, steady export growth, strong employment and wage gains, and continued progress on private and public multi‑year investment projects.
Inflation rate to stay moderate in 2025 – BNM
It was also stated that headline and core inflation averaged 1.4 percent and 1.9 percent in the first five months of the year respectively. Bank Negara expects inflation to stay moderate in 2025, supported by stable global costs and a lack of strong domestic demand-driven pressures. Global commodity price pressures are anticipated to stay subdued, helping to maintain moderate cost conditions within the country.
“The ringgit performance will continue to be primarily driven by external factors. Malaysia’s favourable economic prospects and domestic structural reforms, complemented by ongoing initiatives to encourage flows, will continue to provide enduring support to the ringgit,” said the statement.
