Bank Negara holds OPR at 2.75% and now sees 2026 growth above 5%

Implications for lenders

With the OPR held at 2.75%, funding and lending rates may stay steady in the near term, which supports loan pricing and repayment planning. Because BNM expects inflation to edge higher in 2027, lenders may want to test repayment capacity and fixed-rate pricing against a possible rise in rates.

Implications

Facts

Bank Negara Malaysia's Monetary Policy Committee kept the Overnight Policy Rate (OPR) at 2.75% at its meeting on 5 November, unchanged from the September meeting. ¹ BNM said the stance is "consistent with the outlook of continued price stability" and sustainable growth.

BNM expects growth above 5% in 2026, from about 5% in the September statement. ² It named the external sector as a major growth driver, supported by the global technology upcycle and tourist spending, and said domestic demand is supported by a stable labour market, ongoing investment and measures under Budget 2027. The advance estimate put third-quarter growth at 5.3%. ³

Headline and core inflation averaged 1.8% and 1.9% year to date. ⁴ BNM expects both to edge higher in 2027 while remaining contained, and gave no numeric inflation forecast. It listed downside risks to growth from a prolonged Middle East conflict and lower commodity production, and upside risks to inflation from geopolitical developments, elevated global commodity prices and adverse weather. The committee said it will remain vigilant to cost pressures and domestic demand conditions.

Analysis

Cross-country: the three maritime central banks are on different paths. The BSP raised its rate to 5.50% in October with inflation at 7.8%, Bank Indonesia held at 5.75% with October inflation of 3.23%, and BNM held at 2.75% with September inflation of 1.8%. Malaysia keeps the lowest policy rate and the lowest inflation of the three, and its policy rate stays above headline inflation.

Time series: the OPR is unchanged from 2.75% at the September meeting, while BNM's growth language moved from about 5% in September to above 5% now. Year-to-date core inflation of 1.9% is slightly below the 2.0% average for January to July. The new element is the outlook: BNM signals inflation edging higher in 2027 rather than staying flat, which leaves room for a change in stance if cost pressures build.

Counterpoints and uncertainties

BNM gave no numeric inflation forecast for 2027, so the size of the expected increase is not known. Growth depends heavily on the external sector and the technology cycle; a prolonged Middle East conflict or weaker commodity output could lower it. Third-quarter growth is an advance estimate and may be revised when the full GDP release is published.