<div id="readability-page-1"><div><p>[KUALA LUMPUR] Malaysia’s central bank on Thursday (May 7) held its benchmark interest rate steady, warning of risks to domestic growth and inflation from the prolonged conflict in the Middle East.</p><p>Bank Negara Malaysia (BNM) maintained its overnight policy rate at 2.75 per cent for the fifth straight policy meeting, as predicted by all 28 economists polled by Reuters. It last cut rates in July 2025.</p><p>BNM said its current monetary policy stance was considered to be “appropriate and consistent with the outlook of continued price stability and sustainable economic growth.”</p><p>Latest indicators point to continued growth momentum in Malaysia in the first quarter, though uncertainty over the duration and severity of the Middle East conflict could weigh on the outlook, it said.</p><p>“Nevertheless, Malaysia’s strong fundamentals will continue to underpin the economy’s resilience,” the central bank said.</p><p>Malaysian stocks and the ringgit were largely unchanged following the rate decision.</p><div><div><h3>Navigate Asia in<br/>a new global order</h3><p>Get the insights delivered to your inbox.</p></div></div><p>Malaysia’s economy is expected to grow between 4 to 5 per cent in 2026, easing from the 5.2 per cent expansion last year.</p><p>Advance estimates showed gross domestic product rose 5.3 per cent year on year in the first quarter, with final data to be released on May 15.</p><p>BNM said higher global commodity prices arising from the war in Iran were expected to raise domestic cost pressures, though the impact should remain contained.</p><div><div><div><p>SEE ALSO</p><div><div><div><div><p><img height="5457" src="https://imageproxy.pbkrs.com/https://cassette.sphdigital.com.sg/image/businesstimes/afa18eaa77504db17528e6d46aaf024bce9269cc49f026dd32c12a2b74d63676/query-ZHByPTEmZj13ZWJwJnc9MjQw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="7702" original-src="https://imageproxy.pbkrs.com/https://cassette.sphdigital.com.sg/image/businesstimes/afa18eaa77504db17528e6d46aaf024bce9269cc49f026dd32c12a2b74d63676/query-ZHByPTEmZj13ZWJwJnc9MjQw"/></p></div><p></p><h3><span>Malaysia raises 2026 growth outlook, sees war impact contained</span></h3><p></p></div></div><div><div><div><p><img height="2100" src="https://imageproxy.pbkrs.com/https://cassette.sphdigital.com.sg/image/businesstimes/89c2cbb22ca285d3874f6fb532221a9d8d205861540b645e3fdba61ffe01af06/query-ZHByPTEmZj13ZWJwJnc9MjQw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="3150" original-src="https://imageproxy.pbkrs.com/https://cassette.sphdigital.com.sg/image/businesstimes/89c2cbb22ca285d3874f6fb532221a9d8d205861540b645e3fdba61ffe01af06/query-ZHByPTEmZj13ZWJwJnc9MjQw"/></p></div><p></p><h3><span>Malaysia to hold off on growth upgrade on Middle East risks</span></h3><p></p></div></div><div><div><div><p><img height="3719" src="https://imageproxy.pbkrs.com/https://cassette.sphdigital.com.sg/image/businesstimes/5209961e295e931d8c472e3def472a9e9816c6325365d6588230abb239420713/query-ZHByPTEmZj13ZWJwJnc9MjQw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="5500" original-src="https://imageproxy.pbkrs.com/https://cassette.sphdigital.com.sg/image/businesstimes/5209961e295e931d8c472e3def472a9e9816c6325365d6588230abb239420713/query-ZHByPTEmZj13ZWJwJnc9MjQw"/></p></div><p></p><h3><span>Malaysia holds interest rate at 2.75%, flags geopolitical risk</span></h3><p></p></div></div></div></div></div></div><p>Headline and core inflation averaged 1.6 per cent and 2.1 per cent respectively in the first quarter of 2026, it said.</p><p>Most economists polled forecast no change to the policy rate for the rest of the year, with just two of 22 expecting a 25 basis point hike in the next quarter.</p><p>In a note, Oxford Economics said risks were skewed towards a hike in the second half “if inflation surprises to the upside through broader spillovers, especially in food, or a stronger pass-through of labour costs.”</p><p>Barclays’ Brian Tan said higher oil prices would likely pressure the government to raise the price of the subsidised RON95 transport fuel soon, resulting in an uptick in inflation without further risks to growth.</p><p>“This is likely to then encourage the central bank to reverse last year’s rate cut to help limit any broadening of inflation pressures,” he said.</p><p>The government’s subsidy bill has ballooned tenfold to about RM7 billion (S$2.7 billion) a month since before the war’s outbreak in late February, the finance ministry has said. REUTERS</p><div><p>Decoding Asia newsletter: your guide to navigating Asia in a new global order. <span>Sign up here to get Decoding Asia newsletter.</span> Delivered to your inbox. Free.</p></div></div></div>

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<p>Bank Negara Malaysia maintained its benchmark interest rate at 2.75% for the fifth consecutive meeting, citing risks to domestic growth and inflation from the ongoing Middle East conflict. The central bank noted that while Malaysia's economy shows growth momentum, uncertainties from the conflict could impact the outlook. Economists expect no rate changes for the rest of the year, although some foresee a potential hike if inflation rises unexpectedly. The government’s subsidy bill has significantly increased due to higher global commodity prices linked to the conflict.</p>

- On May 7, 2026, Bank Negara Malaysia maintained the benchmark interest rate at 2.75%, citing risks to domestic growth and inflation from ongoing Middle Eastern conflicts.  
- Despite uncertainties regarding the conflict's duration, Malaysia's economy continues to show growth momentum, with a projected GDP growth of 4% to 5% for 2026, down from 5.2% the previous year.  
- The central bank indicated that rising global commodity prices due to the conflict may increase domestic cost pressures, although these impacts are expected to remain manageable.

Bank Negara Malaysia holds key rate steady, flags risks from Middle East crisis