In its latest Monetary Policy Committee (MPC) meeting, Bank Negara Malaysia (BNM) announced its decision to maintain the Overnight Policy Rate (OPR) at 3%. This move aligns with the central bank’s goal of fostering sustainable economic growth while maintaining price stability.

The global economy showed stronger-than-anticipated growth in 2024, driven by robust performance in major economies and increased global trade. For 2025, global economic prospects remain positive, bolstered by stable labor markets, easing inflation, and less restrictive monetary policies. Continued momentum in the technology sector is expected to support global trade. However, uncertainties related to potential trade and investment restrictions and elevated policy risks could introduce volatility in global financial markets.

Domestically, Malaysia’s economic growth in 2024 met expectations, with strong performance across various sectors. Looking ahead to 2025, resilient domestic expenditure will continue to be a key growth driver. Factors such as wage and employment growth, adjustments to the minimum wage, and increased civil servant salaries will bolster household spending.

Investment activity is expected to thrive, supported by ongoing multi-year private and public sector projects, high realization of approved investments, and initiatives under national master plans. These developments, alongside increased capital imports, are set to enhance export performance and expand Malaysia’s productive capacity. Exports will also benefit from the global tech upcycle, rising non-electrical and electronics goods, and higher tourist spending.

Nevertheless, growth faces potential risks, including an economic slowdown among major trading partners, increased trade restrictions, and lower-than-expected commodity production. On the upside, stronger spillovers from the tech sector, more vigorous tourism activity, and expedited investment project implementation could further boost the economy.

Inflation remained manageable in 2024, averaging 1.8%. Heading into 2025, inflation is expected to remain under control, thanks to easing global costs and the absence of excessive domestic demand pressures. Lower global commodity prices are projected to moderate cost conditions, while the impact of domestic policy reforms on inflation is anticipated to be contained. However, inflation risks could arise from domestic policy spillovers, global commodity price fluctuations, and financial market developments.

The ringgit’s performance continues to be shaped by external factors. Narrowing interest rate differentials between Malaysia and advanced economies provide positive momentum for the currency. Despite potential market volatility due to global policy uncertainties, Malaysia’s favorable economic prospects and structural reforms will help sustain the ringgit’s stability.

BNM’s decision to keep the OPR at 3% reflects its commitment to a monetary policy stance that supports economic growth while ensuring price stability. The MPC will remain vigilant in monitoring economic developments and stands ready to adjust its policies to maintain a conducive environment for sustainable growth.

With a stable OPR, Malaysia is well-positioned to navigate global economic uncertainties while capitalizing on domestic strengths to sustain its growth trajectory in 2025.