Bank Negara Malaysia (BNM) expects inflation to remain moderate in 2026 despite evolving external cost pressures arising from the ongoing conflict in the Middle East.
Speaking at the central bank’s second-quarter 2026 GDP briefing today, BNM Governor Datuk Seri Abdul Rasheed Ghaffour said headline inflation is projected to average between 1.5% and 2.5% in 2026.
He said recent inflation readings and high-frequency indicators continued to point to modest increases in consumer prices.
“While external cost pressures arising from the Middle East conflict may exert some upward pressure on prices going forward, the overall impact on inflation for 2026 is expected to remain contained,” he said.
The Governor said domestic policy measures, including targeted fuel subsidies, together with stable demand conditions, were expected to limit the extent to which higher global costs are passed through to domestic prices.
The latest assessment is consistent with BNM’s existing inflation outlook. The central bank had previously said inflation could trend towards the upper end of its 1.5%-2.5% range amid higher global energy and commodity prices, while noting that policy measures would help contain spillovers into broader domestic inflation.
The central bank has also maintained the Overnight Policy Rate (OPR) at 2.75%, with the current monetary policy stance assessed as supportive of sustainable economic growth while keeping inflationary pressures in check.
