Bank Negara Holds Key Rate at 2.75% as Exports Lift Malaysia’s Growth Outlook

Bank Negara Malaysia kept its benchmark interest rate at 2.75% on Thursday, its sixth and final decision of 2026, as strong exports and sustained domestic demand led it to expect the Malaysian economy to grow more than 5% this year.

The Nov. 5 monetary policy statement said the current rate was consistent with the central bank's outlook for prices and growth. Policymakers expect inflation to rise somewhat next year as commodity prices, geopolitical developments and adverse weather put upward pressure on costs. They still expect price pressures to remain contained, citing domestic policy measures and stable demand. Headline inflation averaged 1.8% this year through the period covered by the statement, while core inflation averaged 1.9%.

The decision leaves the overnight policy rate, or OPR, at the same level at which Bank Negara began the year. For borrowers whose retail floating-rate loans are tied to the Standardised Base Rate, this decision leaves that benchmark unchanged. Bank Negara's reference rate framework links the Standardised Base Rate to the OPR. The rate a bank charges on a particular loan also includes its spread, so the 2.75% policy figure is not the rate a borrower should expect to see quoted on a mortgage offer.

Exports Support Growth as Third-Quarter Data Approach

The Department of Statistics Malaysia estimated in October that output rose 5.3% from a year earlier in the third quarter, following 6% growth in the second. The third-quarter figure is preliminary. Across the first three quarters, the department estimated growth at 5.5%, up from 4.8% in the same period of 2025. That cumulative figure describes the year so far, while Bank Negara's forecast covers the full year.

Manufacturing grew an estimated 7.5% in the third quarter, with export-oriented industries including electrical, electronic and optical products contributing to the increase. Services expanded an estimated 5.4%, supported by wholesale and retail trade, information and communication, and finance and insurance. The mining and quarrying sector moved in the other direction: output declined an estimated 4.9%, with lower crude oil and condensate production contributing to the contraction.

For 2027, the central bank expects technology demand abroad and spending by tourists to support Malaysia's external sector. At home, it expects ongoing investment, stable employment and measures in Budget 2027 to support spending. It cited a prolonged conflict in the Middle East and lower commodity production as risks to growth. Stronger technology exports or tourism could improve the outlook.

The bank said higher energy costs were already feeding through to consumer prices globally and that geopolitical uncertainty could weigh on growth at the same time. For Malaysia, the committee said it would watch both cost pressures and domestic demand in judging the inflation outlook.

The department compiled the advance estimate from available July and August data and estimates for information that was not yet available, according to its technical note. The November release will offer a fuller reading of the quarter and a firmer basis for comparing the performance of industries.

The statistics department is due to publish its full third-quarter GDP release on Nov. 18. Bank Negara scheduled its next policy decision for Jan. 21, the first of six meetings on its 2027 calendar.