KUALA LUMPUR (Oct 15): MARC Ratings Bhd sees one possible overnight policy rate (OPR) cut in 2026, citing contained inflation and moderate economic growth that would allow for a more accommodative monetary stance.
MARC Ratings chief economist Dr Ray Choy said Malaysia’s inflation rate had been well managed, with the research house projecting headline inflation at 1.4% in 2025 and 1.6% in 2026, providing policy space for a potential rate adjustment.
“Because of the low inflation, we are expecting perhaps one more OPR rate cut in 2026, on account of slight moderation of growth and continued external risks,” Choy said during the MARC360 Reflections: Analyses of Malaysia’s Budget 2026 and Post-Budget Debates.
Choy said the agency expects the domestic economy to grow 4.2% in 2025 and 4.0% in 2026 — below the government’s gross domestic growth (GDP) growth target of 4.5% to 5.5% under the 13th Malaysia Plan.
He added that the current OPR of 2.75% sits roughly at the midpoint of the long-term policy range of 1.75%-3.5%, leaving room for Bank Negara Malaysia (BNM) to adjust rates if economic conditions soften further.
Choy said with continued external global risks and trade-policy uncertainty, policy levels need to stand ready to address any potential growth deficiencies going forward.
“For GDP growth next year, while we may have our 4% GDP growth forecast, it is still subject to the volatility of the external environment, and based on some of our scenario analysis and sensitivity analysis, that volatility could lead to, you know, up to 0.3% attrition to our GDP growth [forecast],” he added.
For the first time in five years, BNM trimmed its key OPR to 2.75% in July 2025, citing a softer external environment and moderating domestic momentum.
In late July, the central bank also revised its 2025 GDP growth forecast downward to a range of 4% to 4.8%, from 4.5% to 5.5%, reflecting slower global demand and the lagged impact of fiscal consolidation measures.
According to the Ministry of Finance’s Economic Outlook 2026 report, Malaysia’s economy is expected to grow between 4% and 4.5% in 2026, supported by strong domestic demand, a healthy job market, and ongoing government reforms.
The International Monetary Fund expects Malaysia's real GDP to grow by 4.5% in 2025 and 4.0% in 2026.