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(Bloomberg) — Malaysia held its benchmark interest rate steady for a fifth straight meeting, despite heightened risks to growth from the prolonged conflict in the Middle East.
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Bank Negara Malaysia held the overnight policy rate at 2.75% on Thursday as expected by all 25 economists in a Bloomberg survey. It described the rate as “appropriate and consistent with the outlook of continued price stability and sustainable economic growth.” BNM has adjusted borrowing costs just once in the past two years, with a quarter-point cut in July 2025.
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“Uncertainties surrounding the duration and severity of the Middle East conflict will affect the outlook of domestic growth and inflation,” the central bank said in a statement. “Nevertheless, Malaysia’s strong fundamentals will continue to underpin the economy’s resilience.”
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Economic growth eased to 5.3% in the first quarter as fallout from the war on Iran began to weigh on major industries. Elevated oil prices have also raised the government’s fuel subsidy spending to roughly ten times that of pre-war levels.
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Still, Malaysia is seen as among the best-placed in the region to weather uncertainties spurred by the energy shock. Price pressures remain muted relative to Southeast Asian neighbors that are net energy importers, with the Philippines earlier Thursday reporting a surprise slowdown in growth.
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The ringgit was up 0.3% versus the dollar at 3.91, holding gains after the decision.
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A strong currency has also helped temper imported inflation. The ringgit has weakened less than 1% against the dollar since the war in Iran broke out and is up more than 3% year-to-date, making it Asia’s best-performing currency in 2026.
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—With assistance from Marcus Wong.
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(Adds central bank comment, context on economy.)
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English (US)