Economists foresees BNM to hold OPR steady in 2025, but closely watch on inflationary risks

• The cautious stance comes as the central bank on Wednesday decided during its first monetary policy meeting of the year to hold the benchmark rate steady at 3%, a move unanimously expected by the market.

KUALA LUMPUR (Jan 22): Economists anticipate Bank Negara Malaysia (BNM) to maintain its overnight policy rate (OPR) at 3% throughout 2025, in a move to strike a balance between sustaining economic growth and managing rising inflationary pressures.

The cautious stance comes as the central bank on Wednesday decided during its first monetary policy meeting of the year to hold the benchmark rate steady at 3%, a move unanimously expected by the market.

"All in all, we do not expect BNM to move in 2025 but a close watch on inflation is warranted," HSBC Research said in its note on Wednesday.

While BNM's tone remains neutral, it is interesting to see how the central bank has added new language on "uncertainty", the research team highlighted in referring to the evolving global and domestic risks.

HSBC Research noted that there are "good reasons" to believe that Malaysia is likely to see another year of robust growth, despite tariff uncertainty, and forecasts the gross domestic product (GDP) growth to reach 4.8% in 2025.

Malaysia’s trade sector — particularly electronics exports — has room to recover further, while steady private consumption and ongoing investment initiatives are expected to support economic growth, it noted.

Malaysia’s economy continues to perform robustly, with flash GDP print indicated growing 4.8% year-on-year in 4Q2024, buoyed by resilient domestic expenditure and recovering investment.

Separately, RHB Research echoed the view for OPR to remain at 3% for the rest of 2025, assuming steady economic prospects and manageable inflation pressures.

"In our view, three key factors will drive OPR behaviour: (1) Malaysia's economic momentum, with growth expected to expand by 5% in 2025, (2) the inflation trajectory, with headline CPI [consumer price index] projected to rise by 2.4% in 2025 [within the official range of 2%-3.5%], and (3) to a lesser extent, the behaviour of global rates in the foreseeable future," it added. 

UOB Global Economics & Markets Research continues to expect the central bank to keep the OPR unchanged at 3% through this year.

"Higher uncertainty on trade and tariff policies by trade partners as well as potential upside risks to domestic inflation have led the MPC (Monetary Policy Committee) to remain vigilant against ongoing developments.

The MPC also reiterated that it will ensure that the monetary policy stance remains conducive to sustainable economic growth amid price stability," it said. 

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