skyline at night in Malaysia

Malaysia Monetary Policy March 2024

Malaysia: Bank Negara Malaysia stands pat in March

At its 6–7 March meeting, the Monetary Policy Committee of Bank Negara Malaysia (BNM) left the overnight policy rate (OPR) unchanged at 3.00%, following its hold in January. The decision met market expectations.

The BNM maintained the OPR at a five-year high to shore up the ringgit, which recently slid to a 26-year low. The Bank stated that the currency was “currently undervalued, given Malaysia’s economic fundamentals and growth prospects”. Consequently, the press release also noted that the BNM and the government were taking actions to repatriate and convert foreign investment income by government-affiliated companies to further support the currency in the short term. Meanwhile, inflation and economic activity considerations took the back seat during the March meeting. The BNM deemed price pressures to be moving broadly in line with official expectations, while the GDP growth outlook remained upbeat, downside risks to activity and upside risks to inflation notwithstanding.

The BNM did not provide explicit forward guidance but reiterated that it would “ensure that the monetary policy stance remains conducive to sustainable economic growth amid price stability”. Our panel continues to expect the Bank’s hold to extend through end-2024. However, upside risks to the OPR include a weaker-than-expected ringgit and potential changes to price controls and subsidies this year.

The next monetary policy meeting is scheduled for 8–9 May.

United Overseas Bank analysts Julia Goh and Loke Siew Ting expect no changes to the OPR in 2024:

“The unchanged macro landscape and forward guidance by BNM continue to support our view for an extended rate pause throughout the year. This continuation of steady OPR at 3.00% will help to narrow the negative gap with US rates and in turn supports a further recovery in MYR in 2H24 amid persistent coordinated measures by authorities to improve FX conversion as the year progresses.”

Nomura analysts Euben Paracuelles and Nabila Amani commented on the FX outlook:

“We continue to think BNM is unlikely to resume hiking the policy rate as a response to FX depreciation pressures, as was evident in today’s policy decision. An export-led recovery also supports BNM’s more market-driven approach to FX policy given its view on external competitiveness, only using FX interventions from time to time to stem excessive volatility, along with other orthodox measures to maintain ample liquidity conditions and ensure well-functioning local financial markets.”

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest