PETALING JAYA: Bank Negara Malaysia (BNM) may lower the Overnight Policy Rate (OPR) by 25 basis points to 2.75 per cent in 2025, compared to the current rate of 3.0 per cent, an economic analyst told Utusan Malaysia.
Putra Business School economic analyst Associate Prof Dr. Ahmed Razman Abdul Latiff, stated that this is due to the United States Federal Reserve (Fed) having reduced its interest rate to 4.5 per cent.
"In 2022, when the US interest rate was at 4.5 per cent, the OPR at that time was 2.75 per cent. Therefore, it is likely that the OPR will decrease to 2.75 per cent because the inflation rate remains low at 1.8 per cent,"he told the Malay-language portal.
The last change in the OPR was in May 2023, when it was raised from 2.75 per cent to 3.0 per cent. The first meeting of BNM's Monetary Policy Committee (MPC) for this year is scheduled for January 23 and 24.
Meanwhile, Ahmed Razman forecasts that Malaysia's Gross Domestic Product (GDP) in 2025 could reach between 4 per cent and 5 per cent.
He attributed this to several factors, including a stable government, sustained high demand in the electrical and electronics (E&E) sector, particularly for silicon chips, consistently high commodity prices such as oil, and continuous inflows of foreign direct investment (FDI).
He noted that 2025 will witness more multinational corporations (MNCs) investing in the country.
"We will see more MNCs entering the country, particularly in high-tech industries such as aerospace, artificial intelligence (AI), hybrid technologies, silicon chips, and so on," he added.
However, he also projected some risks that could disrupt the market in 2025.
"These risks include the possibility of a resurgence in tariff wars between the US and China. Additionally, there are ongoing geopolitical tensions in the Middle East, the Russia-Ukraine war, and US actions against the BRICS economic bloc," he explained.