Malaysia’s macro landscape is shifting. The central bank is still holding the line on interest rates – but not without movement elsewhere. Liquidity has been loosened, downside risks are mounting and a dovish turn is starting to take shape. The Ringgit remains fragile, informal FX trading is quietly persisting and banks are still tightening cross-border card usage. At the same time, GDP forecasts are slipping, while inflation stays low. For now, Bank Negara Malaysia (BNM) is buying time. But as growth slows and global trade risks deepen, the pressure to move will only build.
Monetary Policy
BNM kept the Overnight Policy Rate unchanged at 3.00% in its May meeting - marking a full year of policy pause. That wasn’t the surprise. What caught the market’s attention was the 100 basis point cut to the Statutory Reserve Requirement (SRR). That move injected around MYR 19 billion in liquidity. This is a clear signal that while the policy rate is holding, the tightening cycle is over.
The bank’s...
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