Bank Negara Malaysia (BNM) balancing growth and inflation amid Global Challenges

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Bank Negara Malaysia (BNM) recently outlined its monetary policy for 2025, offering a cautiously optimistic view of the domestic economy despite global uncertainties. The central bank is focused on maintaining economic stability while managing inflationary pressures.

1. Growth Prospects: Malaysia's GDP growth for 2025 is projected to range between 4.0% and 5.0%. This growth is primarily driven by continued domestic demand, particularly in the private sector, and a recovery in exports, especially in sectors like electronics and electrical products. The labour market is expected to continue improving, with unemployment rates gradually declining.

   
   

2. Inflation Outlook: Inflation is expected to moderate in 2025, with BNM projecting a headline inflation rate of between 2.0% and 3.0%. This is a decrease from the higher inflation levels seen in 2023 and 2024, primarily driven by easing supply-side constraints and stabilization in global commodity prices. However, food and energy prices remain key risks to inflation.

   
   

3. Monetary Policy: The overnight policy rate (OPR) has been kept at 3.00%, a level that BNM believes is appropriate to support growth while keeping inflation manageable. The central bank remains flexible, indicating that future rate decisions will depend on how the economy evolves, particularly in response to inflationary pressures and global economic conditions.

   
   

4. Risks and Uncertainties: External risks include global economic slowdown, trade disruptions, and geopolitical tensions. Domestically, inflationary pressures related to food and energy costs, as well as potential disruptions in supply chains, are also factors to watch.

   
   

In essence, BNM's 2025 outlook shows a growth rate of 4.0%-5.0% and a moderated inflation forecast of 2.0%-3.0%, with the central bank remaining vigilant and adaptable in its monetary policy approach.