In a strategic move reflecting confidence in the nation's economic conditions, Bank Negara Malaysia has decided to maintain its key policy interest rate at 3% as of Thursday. This decision is rooted in the context of moderate inflation paired with predictions of a sustained economic expansion throughout 2025.
According to central bank statements, the Malaysian economy demonstrated impressive growth, reaching 5.1% in 2024, primarily fueled by robust domestic demand and a rebound in export activities. As Malaysia looks ahead, despite some external uncertainties, the resilience of economic activities is anticipated to remain strong in 2025, underpinned by ongoing domestic demand.
While Bank Negara Malaysia refrained from providing specific gross domestic product (GDP) forecasts, estimates from the Malaysian Ministry of International Trade and Industry suggest a GDP growth range of between 5.0% and 5.5% in 2025, mirroring the performance seen in 2024. Regarding inflation, Bank Negara Malaysia has reported that consumer price index (CPI) figures were relatively calm in January and are projected to stay subdued throughout 2025.
They indicated that headline inflation stood at 1.7% while core inflation was at 1.8% in January 2025. Overall, inflation is expected to remain manageable in 2025, aided by easing global cost conditions and a lack of intense domestic demand pressures. Interestingly, Bank Negara Malaysia adopts a stance distinct from many of its global counterparts, as it does not set an explicit annual inflation target like the commonly referred 2%.
Instead, the central bank aims for 'price stability' as its guiding principle. Like numerous countries worldwide, Malaysia faced a surge in inflation during the pandemic period, with the CPI peaking at 4.7% year-on-year in August 2022. In response to these inflationary pressures, Bank Negara Malaysia escalated its policy rate from 1.75% in mid-2022 to 3.00% in May 2023, and has since maintained this rate steady..