Bank Negara Malaysia (BNM) is expected to maintain its overnight policy rate (OPR) at 2.75% throughout 2026, according to a recent outlook report from BMI, a unit of Fitch Solutions.
The report retains its view that BNM will keep its monetary policy stance unchanged, noting that the bank’s assessment of the 2026 growth outlook is stable, supported by resilient domestic demand. BMI projects Malaysia’s economic growth to slow slightly from an estimated 4.6% in 2025 to 4.1% in 2026, which sits at the lower end of BNM’s forecast range of 4.0-4.5%.
Inflation and FX Forecasts Revised
BMI has revised its forecasts for both inflation and the Malaysian ringgit (MYR).
The forecast for average inflation in 2026 has been raised to 1.9%, up from the previous 1.7%. This revision is attributed to the second phase of wage increases for civil servants in January 2026 and a second MYR100 cash handout to all citizens in February. BMI notes that inflation remains benign, with the revised figure sitting at the upper bound of the government’s 1.3-2.0% forecast.
The exchange rate forecast has been revised, with the ringgit now expected to reach MYR4.00 by the end of 2026, an appreciation from the previous forecast of MYR4.10/USD. This projected strength is primarily due to a downward revision in the US Federal Reserve’s rate forecast by BMI’s Americas team, which now expects the federal funds rate to reach a terminal rate of 3.25%. With BNM holding its rate, the resulting yield differentials are expected to favor the ringgit.
