Bank Negara says Malaysia growth sustainable, with ‘no sign of overheating’

KUALA LUMPUR, Sept 6 — The central bank of Malaysia, Bank Negara Malaysia (BNM), has maintained the overnight policy rate (OPR) at 2.75 per cent, citing sustainable economic growth and contained inflation as key factors. Governor Datuk Seri Abdul Rasheed Ghaffour noted that headline and core inflation had remained within the projected range of 1.5 to 2.5 per cent, despite cost pressures.

Abdul Rasheed expressed confidence that the country's growth would continue to be sustainable, with no signs of overheating, even with the potential support from artificial intelligence (AI) and technology upcycle. He highlighted that the strong growth in the second quarter of 2026 (2Q 2026) was primarily driven by exports, especially from the electrical and electronics (E&E) sector and manufacturing, as well as sustained domestic demand and tourism spending.

Abdul Rasheed projected that the full-year growth for 2026 would be around 5 per cent and would extend into 2027, driven by the same factors. However, BNM remains cautious about potential inflation risks from the ongoing conflict in West Asia and possible supply-side pressures. They will continue to closely monitor the situation and adjust their response based on the source of the inflationary pressure.

Abdul Rasheed emphasized that if the pressure is solely due to cost, monetary policy would not be an effective solution, and alternative measures need to be considered. However, if the pressure originates from demand, monetary policy would play a role in controlling inflation, and they would deploy the necessary levers to maintain price stability.