KUALA LUMPUR (July 3): Malaysia’s central bank is expected to stand pat on monetary policy at its review scheduled for next week as external threats diminish and domestic economy stays resilient, said DBS.

Geopolitical risks have eased following the interim peace agreement between US and Iran while Malaysian exports continue to benefit from global upcycle driven by artificial intelligence, the Singapore bank said in a note. Domestic demand also appears steady, the bank noted.

Policymakers continue to rely on ongoing measures to encourage capital inflows and support the currency, “suggesting that adjustments to interest rates are unlikely in the near term,” DBS said.

The monetary policy review is scheduled for July 9. The last change was in July 2025 when Bank Negara Malaysia (BNM) reduced the overnight policy rate by 25 basis points to 2.75%.

At its most recent meeting on May 7, BNM judged the monetary policy stance to be appropriate even as the central bank flagged uncertainties from the then raging conflict in the Middle East.

Inflationary pressures, meanwhile, remain contained and broadly in line with the country's long-term average, DBS said.

The recent decline in global crude oil prices should alleviate inflationary pressures and reduce fiscal pressures, the bank added.

Brent, the global benchmark for crude oil, has eased from its peak of US$120 in April and was trading at US$72.30 as at 4pm on Friday. Oil prices are still up 20% since the start of this year.