MAINTAINING OPR AT 3.0 PCT ENSURES MONETARY POLICY FLEXIBILITY AMID ECONOMIC UNCERTAINTY -- ANALYST

By Harizah Hanim Mohamed

KUALA LUMPUR, March 6 (Bernama) -- Bank Negara Malaysia’s (BNM) decision to maintain the Overnight Policy Rate (OPR) at 3.00 per cent reflected a strategic calibration of monetary policy that allows the central bank flexibility amid evolving global and domestic economic conditions.

Bank Negara has maintained the OPR at three per cent for 11 consecutive meetings since May 2023.

UOB Kay Hian Wealth Advisors head of investment research Mohd Sedek Jantan that the external risks, including geopolitical tensions and uncertain global trade policies, heightened financial market volatility, making interest rate predictability critical for maintaining investor confidence and exchange rate stability.

“Given that the last OPR adjustment was in May 2023, maintaining the current rate ensures monetary policy flexibility, allowing BNM to respond swiftly to any material shifts in inflationary trends or growth momentum. 

“With external headwinds stemming from trade tensions between the US and key economies such as China, an unchanged OPR allows for the continued transmission of previous policy adjustments while ensuring inflation expectations remain anchored without introducing undue financial tightening,” he told Bernama.

Mohd Sedek emphasised that this measured stance underscores the need to sustain financial stability while allowing previous tightening measures to continue filtering through the economy.

“We see a stable interest rate environment supporting economic expansion by providing businesses and consumers with greater certainty in financial planning and credit accessibility,” he said.

Mohd Sedek said that stability in borrowing costs sustains capital investment, mitigates excessive volatility in household debt servicing, and ensures an optimal balance between growth and inflation control.

“Given Malaysia’s high trade exposure, maintaining a predictable interest rate trajectory also reduces exchange rate volatility, which is crucial in preserving investor confidence and mitigating imported inflationary pressures,” he added.

Meanwhile, BNM’s decision to maintain the OPR rate also looked to be in line with the market expectations.

MIDF Amanah Investment Bank Bhd previously said that the OPR would remain at 3.00 per cent throughout 2025, based on the absence of significant demand-driven inflationary pressures and our assessment that the prevailing rate supports Malaysia’s economic growth trajectory.

CIMB Investment Bank Bhd, in a research note, said that the decision to maintain the OPR at 3.0 per cent for the 11th consecutive meeting was widely anticipated, as the revised fourth quarter of 2024 gross domestic product (GDP) data affirmed solid growth momentum at 5.0 per cent year-on-year, and inflation stayed benign at 1.7 per cent year-on-year in January 2025.

“Overall, the monetary policy language remained neutral, supporting our view of an extended OPR pause throughout 2025. This contrasts with Thailand and Indonesia, where concerns about domestic demand triggered surprise policy rate cuts,” it added.

-- BERNAMA