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Malaysia Monetary Policy November 2023

Malaysia: Bank Negara Malaysia stands pat in November

At its 1–2 November meeting, the Monetary Policy Committee of Bank Negara Malaysia (BNM) left the overnight policy rate (OPR) unchanged at 3.00%, following its hold in September. The decision was in line with FocusEconomics’ Consensus.

The Bank decided to leave the OPR unchanged due to moderating headline and core inflation in the third quarter and its assessment that price pressures would remain modest in 2024. Moreover, preliminary data suggested that economic activity improved in the third quarter. The BNM also expects resilient domestic activity next year, backed by an increase in public spending, robust tourist inflows and a strong labor market. Mounting depreciatory pressures on the ringgit due to a stronger USD amid geopolitical instability and expectations of higher-for-longer interest rates in the U.S. did not deter the Bank from standing pat.

The BNM did not provide explicit forward guidance but stated that it would “ensure that the monetary policy stance remains conducive to sustainable economic growth amid price stability”. As such, the Bank will likely extend its monetary policy pause, prioritizing GDP growth over inflation and currency pressures. The majority of our panelists expect the OPR to remain at its current level in 2024.

The next monetary policy meeting is scheduled for 23–24 January.

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