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BNM: Flexibility Amid Global Bifurcation

• BNM kept its OPR at 2.75%, in line with the consensus. Benign inflation and solid growth justify a steady near-term rate path.
• With inflation anchored near 2% and growth resilient, policy stays neutral, preserving flexibility rather than signalling a clear hike or cut bias.
• Future rate moves hinge on tariff and global inflation risks. Shocks to trade or prices could shift BNM from a prolonged hold to recalibration.

Malaysia Defies Regional Easing

• Bank Negara maintained the OPR at 2.75% in November 2025, aligned with forecasts, reflecting confidence in steady 5.2% Q3 growth and contained inflation.​
• The decision contrasts with regional easing trends; the central bank views the current stance as appropriate amid resilient domestic demand and easing tariff uncertainties.​
• Forward guidance indicates rates are likely to be stable through mid-2026, contingent on global trade developments, inflation trends, and US rate shifts.

BNM Holds Rate Amid Trade Headwinds

• BNM holds its OPR at 2.75% as expected. Its data-dependent stance signals patience amid trade uncertainties & resilient domestic conditions.
• Benign inflation (1.4% headline, 1.9% core) provides policy flexibility, and a moderate outlook through 2026 supports an accommodative stance.
• Strong 4.4% H1 growth, driven by robust 7% Q2 domestic demand, leads analysts to expect rates on hold through 2025, with cuts if growth weakens.

Tuning Tariff Impact Estimates

• President Trump’s tariff policy seemingly follows a random walk with a drift towards deals. Path dependency raises risks and uncertainty around his volatile whims.
• Corporate avoidance measures have spared their customers from most of the pain, but Vietnam’s deal as a template could belatedly bring more of the pain to bear.
• We assume most countries stay at 10%. The impact of others rising to 20% may be smaller than the anti-avoidance hit, with the total now worth less than 0.4% to UK GDP.

By Philip Rush