Bank Negara Malaysia (BNM) is expected to keep the Overnight Policy Rate unchanged at 2.75% at its Monetary Policy Committee meeting on Thursday, 7 May, although the possibility of a rate hike later this year is now on the table, according to Juwai IQI Co-Founder and Group CEO Kashif Ansari.
Ansari said the committee is likely to maintain the current rate but noted that for the first time in two years policymakers may need to seriously consider whether interest rates should move higher later in 2026.
He added that BNM has not raised rates since March 2023 and previous meetings did not feature discussions around tightening.
He pointed to stronger economic conditions as part of the backdrop for the shift in tone, citing Malaysia’s 5.3% first quarter GDP growth as evidence of resilience despite global uncertainty. Inflation, while still moderate, has also edged higher with Bank Negara Malaysia raising its outlook and projecting inflation could reach 2.5% in 2026.
Ansari said there is a case for a single rate increase later this year depending on how inflation and growth evolve but stressed that the immediate decision in May remains firmly in favour of holding rates steady.
He also highlighted external risks including elevated oil prices that could push inflation higher and potential US tariff actions that may affect exports.
On the property market, Ansari said stable rates would continue to support demand by keeping mortgage payments predictable for households. He noted that even a 25 basis point change would have only a marginal impact on monthly repayments for a typical RM450,000 30-year home loan.
He added that demand remains strongest in the RM300,000 to RM600,000 price range across suburban Kuala Lumpur, Penang mainland and Johor, with Johor standing out after recording 6.9% house price growth last year supported by cross-border activity and infrastructure investment.
Ansari concluded that the expected decision to maintain rates would support continued economic stability and sustain momentum in the residential property market.
