Commerzbank highlights that Bank Negara Malaysia kept the OPR at 2.75% but shifted to a more hawkish bias, removing language that policy is “appropriate” and signalling vigilance on cost pressures. Strong growth and benign inflation allow patience, yet the bank appears to prepare markets for a possible hike later this year or early 2027, with USD/MYR seen in a 4.00–4.07 range.

Hawkish BNM stance underpins MYR

“Bank Negara Malaysia (BNM) kept the Overnight Policy Rate (OPR) unchanged at 2.75% yesterday, as widely expected, but the statement contained a distinctly more hawkish tilt. The policy bias appears to have shifted from neutral towards tightening, although an imminent hike is not on the horizon.”

“BNM removed the description of the current monetary-policy stance as “appropriate”, which had appeared in every statement since September 2025, and instead said the current stance was “consistent with” price stability and sustainable growth. It also dropped July’s assessment that overall price pressures would remain contained and said it would “remain vigilant to cost pressures and domestic demand conditions.””

“The shift reflects stronger-than-expected growth and growing concern that elevated global commodity prices stemming from the Middle East conflict could eventually feed through into domestic prices and wages. With inflation currently low and government fuel subsidies cushioning the energy-price shock, BNM can afford to wait. However, it appears to be preparing the market for a possible hike later this year or in early 2027.”

“Growth remains strong, with GDP expanding 6.0% yoy in Q2 and 5.7% in H1, supported by stronger-than-expected exports, particularly technology-related demand, alongside resilient household spending and investment. BNM now expects 2026 GDP growth of around 5%, near the top of its previous 4-5% forecast range, and expects growth to remain resilient in 2027, supported by electronics and semiconductor industries, technology exports, tourism, investment, and stable labour-market conditions.”

“Inflation remains relatively benign, with headline and core inflation averaging 1.8% and 2.0%, respectively, in the first seven months of 2026. BNM is projecting headline and core inflation at 1.5-2.5% and 1.8–2.3% for this year, respectively.”

“USD/MYR was just slightly lower yesterday after BNM’s meeting, down 0.1% to 4.0420. The slightly more hawkish BNM tone and strong growth backdrop could provide some support for MYR. USD/MYR has traded between the 3.88-4.16 range this year, and we look for the 4.00-4.07 range for now.”