Bank Negara Malaysia (BNM) is anticipated to adopt a dovish stance during its upcoming Monetary Policy Committee (MPC) meeting on May 8, signaling readiness to ease interest rates should economic conditions warrant it, according to Maybank Investment Bank (Maybank IB).
In its latest research note, Maybank IB forecasted that the central bank will likely keep the Overnight Policy Rate (OPR) unchanged at 3.00%, while remaining open to potential rate cuts if resilience in the domestic economy weakens.
The earliest potential window for a rate reduction, the firm noted, would be in the second half of 2025, with the July MPC meeting flagged as a possible starting point. Cuts in September or November also remain on the table, depending on how economic indicators evolve.
“Back-to-back rate cuts appear unlikely at this stage,” the research house added, citing BNM’s traditionally moderate and measured approach to monetary adjustments — typically avoiding aggressive policy shifts unless faced with severe economic or global financial stress.
Maybank IB also highlighted geopolitical uncertainties, including US President Donald Trump’s ongoing tariff negotiations, as factors contributing to the current economic risk landscape. Policymakers, it said, are closely monitoring both downside risks to growth and potential inflationary pressures.
Given the lagging impact of monetary policy, Maybank IB projects a modest path forward — likely a single 25-basis-point cut in the second half of the year, followed by a wait-and-see period to assess further developments before making additional adjustments.
The upcoming MPC meeting is expected to draw renewed attention from investors and analysts, especially after two years of relatively uneventful policy holds since the last rate hike in May 2023.
“Trade tensions have shifted the balance of risks facing Malaysia’s growth and inflation outlook,” the note observed.
Meanwhile, the US Federal Reserve’s next steps are not expected to significantly influence BNM’s policy decisions. Although markets are pricing in at least one US rate cut by July, Maybank IB stressed that BNM remains focused on domestic indicators and the local impact of global developments.
–The Star
