Malaysia: Hawkish pause keeps options open – DBS
DBS Group Research economist Chua Han Teng notes that Bank Negara Malaysia (BNM) held the Overnight Policy Rate at 2.75% while dropping language that the current level is appropriate. DBS expects rates to remain unchanged through 2026 but sees risks tilted towards a one-off policy normalisation.
Bank Negara Malaysia (BNM) kept the Overnight Policy Rate (OPR) at 2.75% on September 3, pausing its rate hike for a seventh consecutive decision. DBS research economist Chua Han Teng suggests that BNM will likely maintain this stance through 2026, although there are risks pointing towards a single policy normalization. The central bank's policy statement highlighted two areas to watch in assessing inflation: the ongoing Middle East conflict, which may keep global energy prices high, and the potential for wage growth to outpace economic expansion, leading to upward pressure on prices.
DBS expects BNM to hold rates steady if economic data and external developments support a continued upward trajectory of inflation. If inflationary pressures rise, the bank may reconsider its July 2025 OPR cut.
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