OPR Cut Supports Growth Amid Benign Inflation, Further Cut Possible by End-2025

Maybank Investment Bank Research says the recent 25bps cut in Malaysia’s overnight policy rate (OPR) to 2.75% is growth-supportive given low inflation. It forecasts 2% inflation for 2025, with potential second-half risks from SST expansion, electricity tariff reviews, minimum wage hikes, and foreign labour costs. However, delayed RON95 subsidy rationalisation may keep inflation below 2% this year. Headline inflation eased to 1.1% in June, its lowest since February 2021, while core inflation held at 1.8%. Analysts see possible further OPR cuts to 2.5% by end-2025 to support growth amid geopolitical risks and tariff concerns.

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