OPR maintained at 2.75pct as growth resilient, inflation contained: Bank Negara

 

Sustainable economic growth, as well as contained inflation, were among the factors that led Bank Negara Malaysia to maintain the overnight policy rate (OPR) at 2.75 percent, said its governor Abdul Rasheed Ghaffour.

Rasheed said headline and core inflation had remained contained at 1.8 percent and two percent, respectively, year-to-date, despite cost pressures.

“This has resulted in inflation being within the projected range of 1.5 to 2.5 percent, and it is quite contained. Growth is sustainable, with no sign of overheating,” he told Bernama after the announcement of the OPR on Thursday.

On economic growth, Rasheed believes the artificial intelligence (AI) and technology upcycle could continue to support export growth into 2027, and even until 2028.

“The strong growth in the second quarter of 2026 (2Q 2026) was mainly supported by exports, particularly from the electrical and electronics (E&E) and manufacturing sectors, as well as sustained domestic demand and tourism spending.

“The full-year growth (2026) will be around five percent, and this (growth) will also go into 2027 with the same drivers of growth,” he said.

Nevertheless, Rasheed said Bank Negara remained vigilant over inflation risks stemming from the prolonged West Asia conflict and possible supply-side cost pressures, and would continue to monitor the situation closely to determine the appropriate response.

He remarked that the transmission of cost pressures to the domestic economy had been limited due to domestic policy measures, and cited businesses as having helped absorb cost pressures and made adjustments, including through supply-chain diversification, alternative sourcing strategies or inventory management.

He also said the policy response would depend on the source of inflationary pressure.

“If it is solely cost pressure, monetary policy is not an effective tool, and we need to address that using a different tool.

“But if the inflationary pressure is caused by demand, then monetary policy has a role to play. We will be monitoring closely and deploying the appropriate levers to keep inflation in check,” he added.

- Bernama