KUALA LUMPUR: At the current rate of 3%, the Overnight Policy Rate remains supportive and is aligned with Bank Negara Malaysia’s (BNM) assessment of inflation and economic growth.
Governor Datuk Seri Abdul Rasheed Ghaffour said the Monetary Policy Committee (MPC) takes a data-driven approach to interest rate decisions, closely monitoring evolving economic conditions.
“We consider factors such as global tariffs, policy stances in other economies, and domestic policy measures to assess their impact on inflation and growth.
In evaluating price stability, we examine how persistent price increases are and whether demand pressures are emerging. These insights shape our monetary policy decisions, ensuring that policies remain appropriate to support the economy,” he told reporters during the release of BNM flagship publications today.
He said while BNM remains aware of global developments, the central bank’s monetary policy is primarily driven by domestic conditions.
Abdul Rasheed said external factors are assessed in terms of their impact on Malaysia’s growth and inflation, rather than simply mirroring interest rate decisions made by other countries.
“Ultimately, our focus is on maintaining a resilient and competitive economy. At every MPC meeting, we comprehensively review the latest data and economic outlook to determine the most appropriate policy stance.
“Every decision reflects new evidence and aligns with our mandate to support sustainable growth and price stability,” he said.
During his presentation, Abdul Rasheed said that domestic household spending has remained strong and is expected to continue driving economic growth in 2025.
Consumer activity will remain a key pillar of the economy, and household spending is projected to grow faster, at 5.6%. This reflects sustained consumer confidence and steady income growth, supporting domestic demand.
Investments will also continue to play a crucial role in the economy. Total investment is expected to expand by 9.3% in 2025, following a robust 12.0% growth in 2024. This expansion will be supported by stable external and domestic demand, positive investor sentiment, firms’ continued access to financing, and the ongoing realisation of various projects.
Abdul Rasheed said these factors will contribute to a strong investment climate, ensuring continued economic momentum.
Touching on the local note, he said the ringgit showed resilience in 2024, appreciating by 2.7% against the US dollar and strengthening by 7.5% on a nominal effective exchange rate (NEER) basis against Malaysia’s major trading partners.
As of March 21, 2025, the ringgit has recorded a further 1.1% gain against the US dollar.
Moving forward, foreign inflows – driven by a narrowing of interest rate differentials between Malaysia and advanced economies – are expected to provide additional support for the currency.
Abdul Rasheed said the domestic banking system remains strong, with sufficient capital and liquidity buffers to withstand uncertainties while continuing to support economic lending.
“Each year, we conduct stress tests to assess the system’s resilience. The latest results confirm that the banking sector remains stable, with the total capital ratio staying well above the 8% minimum requirement, even under adverse conditions.
“For 2025, we will continue to ensure banks effectively implement this framework to safeguard customers’ interests,” he said.
