Malaysia's central bank held its benchmark interest rate steady on Thursday, warning of risks from the ongoing conflict in the Middle East.
Bank Negara Malaysia maintained the overnight policy rate at 2.75% for the fifth consecutive meeting, a decision anticipated by all 28 economists polled by Reuters. The bank last cut rates in July 2025.
In a statement, BNM described the current monetary policy stance as "appropriate and consistent with the outlook of continued price stability and sustainable economic growth."
While first-quarter indicators show continued growth momentum, uncertainty over the duration and severity of the Middle East conflict could weigh on the outlook. However, the bank noted Malaysia's strong fundamentals should underpin economic resilience.
Malaysian stocks and the ringgit were largely unchanged following the announcement.
The economy is expected to grow between 4% and 5% in 2026, easing from last year's 5.2% expansion. Advance estimates show first-quarter GDP rose 5.3% year-on-year, with final data due May 15.
BNM warned that higher global commodity prices stemming from the Iran conflict could raise domestic cost pressures. Headline and core inflation averaged 1.6% and 2.1%, respectively, in the first quarter of 2026.
Most economists expect no further rate changes this year, though Oxford Economics sees a hike risk in the second half if inflation surprises on the upside. Barclays analyst Brian Tan noted higher oil prices may pressure the government to raise subsidized fuel prices soon, potentially prompting a rate reversal.