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MUFG expects Bank Negara to hold Malaysia’s policy rate at 2.75%

MUFG points to Malaysia’s contained inflation, with June headline inflation at 2.0% year over year, as support for a neutral stance even with higher energy prices.

Reported · Written up by our desk · Central Banks

MUFG says Malaysia’s macro outlook remains balanced, citing above-trend growth and contained inflation, factors it believes will keep Bank Negara Malaysia on a neutral policy path.

The bank expects Bank Negara Malaysia to maintain the Overnight Policy Rate at 2.75%, noting that Malaysia’s economy grew 5.8% year over year in Q2 after 5.4% in Q1, with growth operating above 4.9% trend for the past four quarters.

MUFG also highlights support from household consumption, rising wages, low unemployment, and robust investment activity, adding that the electronics sector remains a key beneficiary of global technology spending, including AI-related infrastructure.

On inflation, MUFG says fuel subsidies continue to shield consumers from volatile energy prices, keeping headline inflation at 2.0% year over year in June and limiting the need for policy tightening. It adds that higher energy prices could bolster oil related government revenues, providing fiscal flexibility to sustain fuel subsidies and reduce cost pass-through.

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