by DayakDaily Team
KUCHING, May 8: Bank Negara Malaysia (BNM) has maintained the overnight policy rate at three per cent but cautioned that escalating global trade tensions and geopolitical uncertainty pose rising risks to Malaysia’s economy.
In a press statement today, the central bank noted that while the latest economic indicators point towards continued global growth and trade, rising risks in the global environment, including US-imposed tariffs and retaliatory measures, have begun to dampen the outlook for global economic growth and trade.
“This outlook remains subject to considerable uncertainties, which include outcomes of trade negotiations and geopolitical tensions. Such uncertainties could also lead to greater volatility in the global financial markets,” it said.
For Malaysia, economic activity continued to expand in the first quarter of 2025, supported by sustained domestic demand and steady export growth. Headline and core inflation averaged 1.5 and 1.9 per cent, respectively, during the same period. Overall, Malaysia’s inflation is expected to remain manageable this year, underpinned by moderate global cost conditions and the absence of excessive domestic demand pressures.
Looking ahead, BNM warned that escalating trade tensions and heightened global policy uncertainties could weigh on the external sector and pose downside risks to growth. Nevertheless, it remained optimistic that resilient domestic demand could help cushion these external shocks.
“Employment and wage growth, particularly within domestic-oriented sectors, as well as income-related policy measures, will support household spending. The expansion in investment activity will be sustained by the progress of multi-year projects in both the private and public sectors, the continued high realisation of approved investments, as well as the ongoing implementation of catalytic initiatives under the national master plans,” it said.
On a broader perspective, the central bank flagged risks to the growth outlook, stemming mainly from a deeper economic slowdown in major trading partners, weaker sentiment amid higher uncertainties affecting spending and investments, as well as lower-than-expected commodity production.
It also noted that risks to inflation would be dependent on the extent of spillover effects of domestic policy measures, as well as external developments surrounding global commodity prices, financial markets and trade policies.
“At the current OPR level, the monetary policy stance is consistent with the current assessment of inflation and growth prospects. Recognising that there are downside risks in the economic environment, the monetary policy committee (MPC) remains vigilant to ongoing developments to inform the assessment on the domestic inflation and growth outlook.
“The MPC will ensure that the monetary policy stance remains conducive to sustainable economic growth amid price stability,” it said. – DayakDaily
