KUALA LUMPUR, March 5 (Bernama) -- Bursa Malaysia ended higher today in line with regional equities as bargain hunting emerged after the benchmark index briefly slipped below the psychological 1,700 level in recent trading sessions. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) increased 14.98 points, or 0.88 per cent, to close at an intraday high of 1,713.20 from Wednesday’s close of 1,698.22, The benchmark index opened 8.03 points higher at 1,706.25 and slipped to an intraday low of 1,701.83 in early trade. Gainers beat losers by 572 to 511, while 523 counters were unchanged, 1,016 untraded, and 11 suspended. Turnover declined to 2.85 billion units worth RM3.26 billion from Wednesday’s 3.51 billion units worth RM3.79 billion.
Malaysia’s central bank is widely expected to keep interest rates unchanged, opting for caution as the Iran war injects fresh uncertainty into the global economy.
Key Takeaways
Bank Negara Malaysia likely to hold OPR at 2.75%
Iran war raises inflation and supply-chain risks
Oil price spike could lift Malaysia’s inflation by up to 0.6ppt
Markets pricing slight probability of rate hike over next 12 months
Rate Decision: All Eyes on 2.75%
Bank Negara Malaysia is expected to maintain its overnight policy rate (OPR) at 2.75%, according to all 24 economists surveyed by Bloomberg.
The central bank has adjusted rates only once in the past two years — a 25 basis-point cut in July 2025.
Key Point: BNM is likely to stay neutral as geopolitical risks complicate the policy outlook.
Inflation Risks Rising
Escalating Middle East tensions have pushed up oil prices, raising concerns about imported inflation.
According to Oversea-Chinese Banking Corp:
A 10% increase in global oil prices could raise Malaysia’s headline inflation by 0.4–0.6 percentage points.
While fuel subsidies cushion consumers, reforms in September 2025 narrowed subsidy coverage, potentially making inflation more sensitive to energy shocks.
This could lead to more noticeable price pressures compared to previous oil spikes.
Growth Outlook Still Resilient
Malaysia’s economy outperformed expectations in 2025, supported by:
Strong consumer demand
Solid exports
Resilient manufacturing
However, trade uncertainty remains a key risk.
Donald Trump has imposed a new global tariff of at least 10%, creating uncertainty over Malaysia’s earlier agreement with Washington.
HSBC Holdings Plc noted that while Malaysia remains competitive as a manufacturing alternative to China, potential US tariffs on semiconductors could pose downside risks.
Key Point: Growth remains firm, but tariffs and geopolitical shocks are emerging headwinds.
Currency Strength and Rate Expectations
Despite volatility, the ringgit has strengthened about 3% year-to-date and 13% over the past year — outperforming regional peers.
Ringgit swaps are pricing:
Over 20% probability of a 25 basis-point rate hike within 12 months
BNM has not signalled discomfort with currency strength, suggesting policymakers remain focused on macro stability rather than FX management.
What to Watch in Today’s Statement
Investors will scrutinise:
Inflation language — especially oil pass-through risks
Growth outlook amid tariff uncertainty
Tone shift toward tightening bias or continued neutrality
Given elevated geopolitical uncertainty, analysts expect BNM to emphasise flexibility and data dependence.
Bottom Line
Malaysia enters this phase of global uncertainty from a position of relative strength. However, higher oil prices and trade tensions add complexity to the policy path.
Overall theme: BNM is set to hold rates steady while balancing strong domestic momentum against rising external risks.
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