Bank Negara Malaysia (BNM) kept the Overnight Policy Rate (OPR) at 2.75% after its Monetary Policy Committee (MPC) meeting on 4-5 Mar 2026. Maybank IBG in its report maintained view of stable OPR this year as BNM holds on to the “insurance policy” taken i.e. 25bps cut in July 2025 to support the domestic economy given the fresh rounds of trade uncertainties and geopolitical tensions following US Supreme Court ruling on Trump’s tariffs and US/Israel-Iran war.
… amid trade uncertainties, geopolitical tensions
The Monetary Policy Statement maintained the narratives of continuing growth momentum globally and domestically, alongside the outlook of moderate domestic inflation. But MPS also flags heightened downside risk to global economic growth that could spill to the domestic economy in the wake of the outbreak of Middle East conflict in the weekend following US-Israel strikes on Iran and Iran’s retaliations. This adds to the new round of uncertainties on US tariffs following US Supreme Court’s ruling on 20 Feb 2026 that the tariffs (reciprocal tariffs; country-specific tariffs) imposed under the International Emergency Economic Power Act (IEEPA 1977) is illegal, which was swiftly followed by President Trump announcing a 10% global tariff under the previously unused Section 122 of the Trade Act 1974, with prospect of hike in this tariff to 15%, on top of the overhangs in the product-specific tariffs under other trade laws.
BNM’s MPC statement issued this week acknowledges the renewed heightened external uncertainties due to the evolving Middle East conflict in terms of duration and disruption. At the same time the message is that Malaysia is entering the situation and facing the headwinds armed (no pun intended) with sound macroeconomic fundamentals. Thus BNM maintains that the current OPR level reflects monetary policy stance that is appropriate and supportive of the economy.
Maintain view of stable OPR in 2026
Overall, the house view is that the MPS is signalling stable OPR outlook into the foreseeable future, thus consistent with our view of OPR staying at 2.75% this year to support the domestic economy as the trade and geopolitics “wildcards” that we highlighted in our Year Ahead Macro 2026 as the key risks to economic outlook this year is playing out
