KUALA LUMPUR, May 7 (Bernama) -- Bursa Malaysia closed marginally higher today, supported by continued buying in banking heavyweights following Bank Negara Malaysia’s decision to maintain the overnight policy rate (OPR) at 2.75 per cent. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 1.98 points, or 0.11 per cent, to 1,758.85 from Wednesday’s close of 1,756.87. The benchmark index, which opened 5.94 points higher at 1,762.81, moved between 1,758.42 and 1,768.46 during the day. Market breadth was positive with gainers beating losers 660 to 583. A total of 593 counters were unchanged, 815 untraded, and nine suspended. Turnover eased to 3.78 billion units worth RM4.24 billion, compared with 3.98 billion units worth RM3.97 billion yesterday.
Malaysia’s central bank is expected to keep interest rates unchanged, as inflation remains relatively muted despite rising global energy prices linked to geopolitical tensions.
Rate Pause Expected Amid Stable Inflation
Bank Negara Malaysia is widely expected to hold the Overnight Policy Rate (OPR) at 2.75%, according to economists surveyed.
- Last rate move: 25bps cut in July 2025
- Policy stance: wait-and-see amid global uncertainty
This contrasts with some regional peers that are considering policy tightening due to stronger inflation pressures.
Inflation Still Within Manageable Range
Malaysia’s inflation remains contained compared to regional economies:
- CPI: 1.7% (March) vs 1.4% in February
- Still within the central bank’s 2026 forecast range
By comparison:
- Philippines: 7.2% inflation
- Vietnam: 5.46% inflation
The relatively low inflation gives policymakers room to delay tightening.
Strong Ringgit Helps Contain Imported Inflation
The Malaysian ringgit has appreciated about 3% against the US dollar this year, helping to:
- Reduce imported inflation
- Offset rising global commodity prices
This currency strength is a key factor supporting policy stability.
Subsidies Shield Consumers For Now
Government measures have helped cushion the impact of higher energy prices:
- Fuel subsidies estimated at RM7 billion in April
- Includes targeted diesel support and gasoline quotas
However, there are growing concerns that:
- Cost pressures may pass through to producers
- Inflation could rise later in 2026
Growth Risks Tilt Policy Toward Caution
Economic growth has shown signs of moderation:
- Q1 growth slowed, impacted by global uncertainties
- External risks from geopolitics and trade volatility persist
A weaker growth outlook strengthens the case for extended policy pause.
Key Watch: Inflation and Fiscal Adjustments
Investors will focus on:
- BNM’s inflation outlook, especially fuel-related risks
- Potential changes to RON95 fuel subsidy policies
- Signals on whether growth remains on a “steady path”
Investor Takeaways
- Bank Negara Malaysia is expected to hold rates at 2.75%.
- Inflation remains manageable, providing policy flexibility.
- A strong ringgit helps cushion imported cost pressures.
- Fuel subsidies are delaying inflation impact, but risks remain.
- Growth uncertainty supports a cautious, wait-and-see stance.
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