Summary
BNM kept the OPR steady at 3.00%, reflecting a supportive stance for economic expansion and price stability.
Future economic growth remains resilient, driven by strong domestic spending, stable labour market, export gains, and strategic investments.
Inflation is projected between 2.0%-3.5% driven by subsidy rationalisation and higher incomes contributing to upward pressure.
BNM’s decision to hold the OPR at 3.00%. The decision aligns with our forecast and market expectations, reflecting the central bank's view that the current policy stance supports economic growth while maintaining price stability. BNM reaffirmed its commitment to data-driven decisions, focusing onto sustainable growth and manageable inflation for 2025.
Remains optimistic on economic growth prospects. On the domestic front, BNM anticipates continued economic growth in 2025 underpinned by resilient domestic spending. Employment and wage growth alongside government policy measures such as salary increases for civil servants and the upward revision of the minimum wage will drive household consumption. Strong investment activity propelled by the ongoing implementation of national frameworks and infrastructure projects is expected to sustain growth. Robust exports supported by the global tech upcycle and rising tourism, will further bolster the economy. However, external risks such as the prospects of slowing growth across major trading partners and geopolitical tensions could weigh onto growth outlook. Globally, economic growth is expected to continue supported by positive labour market conditions, moderating inflation, less restrictive monetary policies and tech upcycle. However, risks remain on the cards, including trade and investment restrictions and volatility in global financial markets.
Expects controlled inflation amid subsidy reforms. BNM’s inflation outlook for 2025 remains modest, with both headline and core inflation expected to stay within a manageable range. Inflation is projected to average between 2.0%-3.5%, driven by factors such as the gradual rationalisation of RON95 subsidies and rising household incomes due to the increase in civil servant salaries. While these factors may exert some upward pressure on inflation, targeted subsidy measures aim to mitigate these impact focus onto vulnerable groups and easing fiscal burdens. Additionally, global commodity prices are expected to remain stable and domestic policy measures will be supportive to contain inflationary pressure.
Ringgit remains supported. BNM noted that ringgit movements remain influenced by external factors, including global monetary policy shifts and geopolitical uncertainties. However, the narrowing interest rate differential between Malaysia and advanced economies along with strong economic fundamentals is expected to support the ringgit in 2025. The central bank reaffirmed its readiness to manage excessive volatility and urged market participants to focus on long-term trends over short-term fluctuations. Year-to-date, the ringgit has strengthened by 0.7% against the greenback. We are keeping our projection of year-end 2025 ringgit at RM4.35 against the greenback.
Our thoughts. We align with BNM’s view that the current OPR setting is appropriate. While inflation remains manageable, upward pressures from rising disposable incomes and subsidy rationalization call for careful monitoring. We expect the OPR to remain stable at 3.00% guided by three key factors: (1) solid economic momentum, with GDP growth projected at 4.6% in 2025; (2) a moderate inflation trajectory, with headline CPI forecasted at 2.6%, within the official range of 2.0%-3.5%; and (3) global interest rate cuts as a secondary influence. Our outlook remains optimistic, driven by robust domestic spending, a resilient labour market, recovering tourism, and ongoing multi-year infrastructure projects. Investment spending is expected to gain further traction from pro-growth initiatives under the Economy MADANI framework, such as the National Energy Transition Roadmap and the New Industrial Master Plan 2030.
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Currency | Buy Rates (RM) | Sell Rates (RM) |
---|---|---|
USD | 4.400379 | 4.430934 |
EUR | 4.814360 | 4.819033 |
CNY | 0.609971 | 0.610580 |
HKD | 0.566392 | 0.570331 |
SGD | 3.304308 | 3.327507 |