Kenanga expects BNM to leave the Overnight Policy Rate (OPR) unchanged at 2.75% throughout 2026, supported by contained inflation and resilient domestic economic growth.
The research house forecasts Malaysia’s average inflation at around 2.1% this year, although it warned that renewed disruptions in the Strait of Hormuz could pose upside risks through higher imported fuel, fertiliser and logistics costs.
It said resilient domestic demand, growth tracking towards the upper end of its 4.5% to 5.0% forecast range and manageable underlying inflation should allow the central bank to look through temporary supply-driven price shocks while maintaining policy stability.
Kenanga maintained its year-end forecast of RM3.95 per US dollar for 2026 and RM3.90 by end-2027, citing expectations of broader US dollar weakness over the medium term.
The research house said Malaysia’s domestic fundamentals remain supportive, pointing to record foreign currency deposits of RM316 billion in May, which could eventually be converted into ringgit and provide support for the local currency.
While geopolitical tensions in West Asia remain a key risk, Kenanga believes recent ceasefire arrangements are likely to hold despite intermittent violations, helping to keep risks to the ringgit more balanced going forward.
