DBS Group strategists Taimur Baig and Nathan Chow anticipate that Bank Negara Malaysia (BNM) will keep its Overnight Policy Rate (OPR) unchanged at 2.75% during its meeting on September 3. This follows the central bank's 25 basis point insurance rate cut in July 2025, with the strategists noting that BNM has maintained this stance since then [1].
The analysts argue that Malaysia's headline inflation remains contained, easing to 1.8% year-on-year in July 2026—the lowest level since March—and staying within the policymakers’ 2026 average forecast range of 1.5-2.5% [1]. This inflation environment, combined with robust projected economic growth near 5% in 2026, supports the view that there is little urgency for BNM to hike rates, despite some market participants expecting a reversal of the previous insurance easing in upcoming meetings [1].
DBS expects BNM to continue assessing that the current monetary policy stance is conducive to supporting economic growth while maintaining price stability. The strategists emphasize that the central bank is likely to prioritize ongoing price stability and economic support over immediate tightening, given the current macroeconomic backdrop [1].
CONCLUSION
DBS strategists forecast that Bank Negara Malaysia will maintain its policy rate at 2.75% in the near term, citing contained inflation and strong growth prospects. The market is expected to interpret this steady policy stance as supportive of economic stability, with limited immediate pressure for rate hikes.