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Market Highlights
Economic Update
Fri, 23 Jan 2026 07:36 am
BNM MPC Meeting - Cautious optimism with stable OPR outlook

BNM maintained the OPR at 2.75% in its January MPC meeting, in line with expectations.

BNM expects global growth to be supported by robust tech investment. Domestically, growth will be underpinned by steady labour market conditions, income-related measures and investment in mega infrastructure and smaller-scale public projects.

Headline inflation will stay moderate in 2026 amid easing global commodity prices, while core inflation remains stable in the absence of excessive demand pressures.

Overall, BNM holds a cautiously optimistic view on the growth outlook. While forecasts are kept unchanged for now, there may be room for upward revisions, with any adjustment earliest in March alongside the Annual Report release.

BNM highlighted that the current monetary stance remains appropriate, noting that only a much stronger growth trajectory or a material reduction in external uncertainties would warrant a rate hike to the previous 3.00% level.

Given the upside bias to growth and a benign inflation environment, we expect BNM to keep the OPR at 2.75% through 2026.

Fri, 23 Jan 2026 07:29 am
KLCI Extends Gains Amid Easing Global Tensions

Malaysia Market Review: The FBM KLCI extended its upward momentum on Thursday, climbing 0.66% with lower liners following suit. Market breadth was positive, with 641 advancers outpacing 418 decliners as foreign investors remained net buyers. Sectoral performance was uniformly strong, with Construction (+1.15%), Industrial Products (+1.02%) and Finance (+1.01%) leading gains, while Healthcare (-0.07%) was the only sector ending in the red.

Global Markets. Bullish sentiment returned to Wall Street as the Nasdaq rose 0.91%, the Dow 0.63%, and the S&P 500 0.55%. Equities climbed after President Trump paused a planned 10% tariff on eight NATO members, easing near-term geopolitical tensions. While focus is shifting toward the broader earnings season, Intel shares slid in after-hours trading as soft guidance overshadowed a beat on earnings. In Europe, the STOXX 600 gained 1.03% on news of a US-European framework on the ‘Golden Dome’ missile defence system and Greenland’s mineral resources. This optimism extended into Asia, where the Nikkei 225 surged 1.73% and the KOSPI rose 0.87%.

 

Market Outlook. The FBM KLCI is expected to maintain a constructive bias, supported by sustained institutional participation and robust domestic fundamentals. In the US, steady November core PCE inflation at 2.8% YoY and an upward revision to 3Q25 annualised GDP growth to 4.4% have kept the Federal Reserve on track to hold interest rates steady at its next meeting. Investors will also monitor Japan’s inflation print and the upcoming Bank of Japan interest rate decision today for signs of future policy direction. Although data surprises may drive short-term volatility, the local market should remain underpinned by continued foreign interest and selective buying in large-cap stocks with clear earnings visibility.

Economic Update
Wed, 21 Jan 2026 07:07 am
Malaysia Inflation Rate - Benign inflation anchors a steady OPR outlook  

Headline inflation rose to +1.6% YoY in December 2025 (Nov: +1.4%), slightly above consensus of +1.4%. For 2025, inflation averaged +1.4% (2024: +1.8%), pointing to a still-benign inflation backdrop amid muted policy pass-through.

Core inflation edged up to +2.3% YoY (Nov: +2.2%), its highest level since October 2023, reinforcing our view that domestic demand will remain the key growth anchor in 2026.

Heading into 2026, domestic demand will be underpinned by tourism under Visit Malaysia 2026, tight labour market conditions and ongoing income-related policy support, providing modest support to inflation.

That said, muted policy pass-through, the fixing of RON95 prices, subdued global commodity prices and a firmer ringgit should cap upside risks to inflation.

We maintain our 2026 inflation forecast at +1.8% YoY and expect BNM to keep the OPR at 2.75% in 2026.

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