PETALING JAYA: Bank Negara Malaysia (BNM) will likely leave the Overnight Policy Rate unchanged at 2.75% at its Monetary Policy Committee (MPC) meeting on Thursday, but may have to raise rates later this year, according to Juwai IQI co-founder and group CEO Kashif Ansari.
“We think the MPC will leave rates unchanged, but what’s most notable this time is that the committee actually has to consider evidence that it might have to raise rates later in the year,” he said.
BNM, he added, has not raised rates since March of 2023 and at recent meetings, the committee has not had to consider the need to raise rates.
However, he said, for the first time in two years, it now looks like 2026 will be the year when the discussion shifts towards whether rates should be moved upwards.
“In part, this still-limited upward rates pressure reflects good financial news for Malaysian consumers and businesses. The 5.3% first-quarter GDP growth showed the economy is resilient despite the global situation. Along with growth, inflation is also up, although still moderate. Bank Negara also upped its forecast, saying inflation could reach 2.5% in 2026,” he emphasised.
In short, Ansari said, there is a case for predicting one rate increase later in the year, but that will depend on how the economy and inflation perform between now and then. For the May meeting, the case for holding rates steady is solid.
“Factors that could shake up Bank Negara’s plans include oil prices, which, if they remain high, would likely push inflation up. New tariffs from US President Donald Trump could also hit Malaysia’s exports. These unpredictable future events won’t change the committee’s decision at their meeting on May 7.”
Ansari also said, “People ask me what it will mean for property. I tell them that the market is in a good place, and Thursday’s decision will keep it there. Stable rates mean homeowners’ mortgage payments will remain stable and new buyers have more predictability about what their payments will be. For a typical RM450,000 30-year home loan, a 25-basis-point rates decline would cut roughly RM60 to RM70 per month from your repayments. An increase of the same size would add that much to your costs. Even if rates do rise this year, the increase in expenses would not have much practical impact on owners and buyers.”
The current interest rate environment has been good for residential property and the most popular homes with buyers are those priced between RM300,000 and RM600,000 in suburban Kuala Lumpur, the Penang mainland, and Johor, he noted.
“Johor continues to deserve special attention. House prices there rose 6.9% last year, more than in any other state, and the cross-border and infrastructure investment suggests demand there will keep growing,” said Ansari.
