BANK Negara Malaysia (BNM) has left the Overnight Policy Rate (OPR) unchanged at 2.75% following its fifth Monetary Policy Committee (MPC) meeting of 2026, matching both our expectations and market consensus.
The Statutory Reserve Requirement was likewise maintained at 1.00%. BNM said the current level of the OPR remains appropriate, supporting its assessment that monetary conditions are consistent with continued price stability and sustainable economic expansion.
“The September MPC statement remained broadly neutral in tone, although its wording was somewhat firmer than in July,” said Public Investment Bank (PIB).
BNM continues to view global economic growth as resilient, underpinned by strong expansion in the technology sector, improving supply conditions and relatively stable labour markets.
Notably, the central bank dropped its earlier reference to firmer prices for key commodities.
Instead, it pointed out that inflation has moderated in recent months but is likely to remain relatively elevated, partly due to the delayed impact of higher energy costs filtering through to consumer prices.
This suggests that BNM is taking a more cautious view of external cost pressures, even though the immediate effects of the earlier supply shock have eased.
The central bank also maintained its emphasis on risks surrounding the global economy.
Prolonged geopolitical tensions, persistent inflationary pressures, tighter global financial conditions and stretched asset valuations remain key concerns.
“This indicates that BNM continues to regard the external environment as presenting risks in both directions, rather than as a straightforward source of disinflationary support,” said PIB.
On the upside, stronger-than-expected technology-related spending, a faster improvement in global supply chains and supportive policy measures could provide additional momentum to growth.
Nevertheless, BNM appears increasingly mindful that external cost pressures may prove more persistent than previously anticipated.
Domestically, the central bank’s assessment of economic growth appears more confident, pointing to a firmer outlook for the local economy.
BNM anchored its assessment on realised strength, with the economy expanding by +5.7% year-on-year (YoY) in the first half of 2026 (1H26) despite the challenging external backdrop, while the reference to full-year growth coming in around 5.0% places the outlook closer to the upper end of its earlier 4.0% to 5.0% forecast range.
“We maintain our OPR call at 2.75% through end-2026, implying another hold at the final MPC meeting in November,” said PIB.
Further easing is difficult to justify after the robust 1H26 growth outturn and BNM’s expectation for growth to settle around 5.0% this year.
At the same time, a hike still requires clearer evidence that upstream cost pressures are reaching consumers more broadly.
Headline inflation averaged +1.8% YoY in Jan-Jul, broadly tracking our +2.1% YoY full-year forecast, although the path remains back-loaded and requires inflation to average around +2.5% YoY over Aug-Dec.—Sept 4, 2026
Main image: Bloomberg News
