KUALA LUMPUR, March 6 — Bank Negara Malaysia’s (BNM) decision to maintain the overnight policy rate (OPR) at 3.00 per cent during the March 2025 monetary policy meeting is broadly expected, emphasising the current conducive policy stance to sustain economic growth.
MIDF Amanah Investment Bank Bhd said this is consistent with the current assessment of economic growth and inflation. It expects domestic and external demand to fuel growth.
“Despite external uncertainties, the strength in economic activity is expected to be sustained in 2025, anchored by domestic demand. Employment and wage growth, as well as policy measures, including the upward revision of the minimum wage and civil servant salaries, will support household spending.
“Domestically, while fundamentals are strong, rising costs and policy changes may constrain demand through higher inflation,” it said in a research note today.
Inflation is expected to increase due to supply-side pressures, like policy adjustments and rising costs, but will “remain contained”.
“BNM has the necessary policy flexibility to respond to future economic uncertainties, particularly those stemming from domestic economic conditions and the evolving inflation outlook in Malaysia,” MIDF said.
It is cautious about the developing trade war between the US and its trading partners, which will result in rising protectionism, which could strain the global economy.
MIDF added that “further fragmentation” could intensify trade, resulting in a global slowdown that may influence the OPR’s trajectory.
RHB Investment Bank Bhd said it expects the OPR to remain at 3.00 per cent for the rest of the year, assuming economic prospects remain “steady” and inflation pressure is “manageable”.
Three factors will drive the OPR trajectory — Malaysia’s economic momentum, the inflation trajectory and, to a lesser extent, global interest rates.
Inflationary risks are expected to stay subdued at this stage, but the inflation trajectory depends on the subsidy retargeting measures, the scope of expansion of the sales and service tax, household income and demand, and global commodity prices.
— Bernama
