Malaysia Interest Rate Steady at 2.75% in November 2025: A Data-Driven Macro Analysis
Malaysia’s central bank held the interest rate steady at 2.75% in November 2025, maintaining the level since July. Inflation pressures have moderated, but external risks and fiscal constraints persist. Financial markets showed muted reactions, reflecting cautious optimism. The macro outlook balances stable growth with geopolitical uncertainties and structural shifts in the economy.
Table of Contents
Malaysia’s interest rate was held at 2.75% on November 6, 2025, matching the previous two readings in July and September. This marks a pause after a cut from 3.00% in March 2025, reflecting a cautious monetary stance amid evolving macroeconomic conditions. The decision aligns with the central bank’s aim to balance inflation control and growth support.
Drivers this month
- Stable core inflation at 2.90% YoY, down from 3.40% in Q2 2025.
- Moderate GDP growth forecast of 4.20% for 2025, slightly below 4.50% in 2024.
- External demand softening due to global trade tensions and slower China growth.
Policy pulse
The 2.75% rate remains below the pre-pandemic average of 3.25%, signaling a cautious but accommodative monetary policy stance. Inflation remains within the central bank’s 2–3% target band, reducing urgency for hikes.
Market lens
Financial markets reacted mildly: the MYR/USD pair appreciated 0.10% post-announcement, while 2-year government bond yields held steady near 3.10%. Breakeven inflation swaps suggest market inflation expectations remain anchored around 2.80%.
Core macroeconomic indicators underpin the interest rate decision. Inflation trends, GDP growth, and labor market data provide a comprehensive view of Malaysia’s economic health.
Inflation and growth trends
Consumer Price Index (CPI) inflation eased to 3.10% YoY in October 2025, down from 3.60% in July. Core inflation, excluding volatile food and energy, stabilized at 2.90%. This moderation follows a peak of 4.20% in early 2025. GDP growth projections for 2025 stand at 4.20%, a slight slowdown from 4.50% in 2024, reflecting weaker export demand and cautious domestic spending.
Labor market and fiscal stance
Unemployment remains low at 3.20%, near historic lows, supporting consumer confidence. Fiscal policy remains moderately expansionary, with the government targeting a 3.50% deficit of GDP in 2025, down from 4.00% in 2024. Public debt stands at 60% of GDP, manageable but limiting fiscal space for stimulus.
External environment
Malaysia faces external headwinds from slower global trade growth and geopolitical tensions in Southeast Asia. Commodity prices, especially palm oil and crude oil, have stabilized but remain volatile. The ringgit’s moderate strength supports import costs but pressures exporters.
Drivers this month
- Inflation deceleration from 4.20% in Q1 2025 to 3.10% in October.
- GDP growth steady at 4.20%, down from 4.70% in late 2024.
- Stable labor market supporting consumption.
Policy pulse
The interest rate pause reflects confidence in inflation containment without derailing growth. The central bank signals readiness to adjust if inflation deviates from the 2–3% target range.
Market lens
Immediate reaction: MYR/USD strengthened 0.10%, while 2-year yields remained flat at 3.10%. Inflation-linked bonds showed slight tightening, indicating anchored inflation expectations.
This chart highlights a stable monetary policy stance amid moderating inflation and steady growth. The pause at 2.75% suggests the central bank’s confidence in current macro conditions but readiness to respond to external shocks or inflation surprises.
Looking ahead, Malaysia’s monetary policy faces a complex interplay of domestic and external factors. The central bank’s forward guidance emphasizes data dependency and flexibility.
Bullish scenario (30% probability)
- Global trade recovers, boosting exports and GDP growth above 4.50%.
- Inflation remains contained below 3%, allowing rate cuts in H2 2026.
- Fiscal consolidation supports investor confidence and ringgit strength.
Base scenario (50% probability)
- Growth stabilizes around 4.20%, inflation hovers near 3%.
- Interest rates remain at 2.75% through 2026 with minor adjustments.
- External risks persist but are manageable.
Bearish scenario (20% probability)
- Geopolitical tensions escalate, disrupting trade and investment.
- Inflation spikes above 4%, forcing rate hikes to 3.00% or higher.
- Fiscal pressures increase, weakening ringgit and financial conditions.
Policy pulse
The central bank’s cautious stance reflects balancing act between supporting growth and guarding against inflation resurgence. Forward guidance will likely emphasize flexibility amid global uncertainties.
Market lens
Market participants are pricing in a stable rate environment with moderate volatility. Inflation breakevens and bond yields suggest confidence in the base scenario but remain sensitive to external shocks.
Malaysia’s interest rate decision to hold at 2.75% reflects a steady macroeconomic backdrop with manageable inflation and moderate growth. The central bank’s data-driven approach balances domestic needs with external uncertainties. Fiscal discipline and geopolitical developments will be key to sustaining this equilibrium. Investors should monitor inflation trends, ringgit movements, and global trade dynamics closely.
Key Markets Likely to React to Interest Rate
The interest rate decision influences several key markets that track Malaysia’s monetary policy closely. The FBMKLCI index reflects domestic equity sentiment tied to economic growth and interest rates. The MYRUSD currency pair is sensitive to rate differentials and capital flows. The BTCUSD pair often reacts to global risk sentiment influenced by monetary policy. The AXJ ETF tracks Asian emerging markets, including Malaysia, and responds to regional rate shifts. Lastly, the USDMYR pair is a direct inverse of MYRUSD, providing alternative currency exposure.
Interest Rate vs. FBMKLCI Since 2020
Since 2020, Malaysia’s interest rate cuts from 3.25% to 2.75% coincided with a rebound in the FBMKLCI index from pandemic lows near 1300 points to over 1600 points in 2025. The inverse relationship between rates and equity valuations highlights the stimulative effect of lower borrowing costs on corporate earnings and investor sentiment.
FAQ
- What is the current interest rate for Malaysia?
- The current interest rate is 2.75%, unchanged since July 2025.
- How does Malaysia’s interest rate affect inflation?
- Interest rates influence borrowing costs, which in turn affect spending and inflation. The current rate aims to keep inflation within the 2–3% target.
- What are the risks to Malaysia’s monetary policy outlook?
- Risks include geopolitical tensions, global trade slowdowns, and unexpected inflation spikes that could prompt rate adjustments.
Key takeaway: Malaysia’s steady 2.75% interest rate reflects a balanced approach amid moderating inflation and cautious growth, with flexibility to respond to evolving risks.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
Updated 11/6/25
Key Markets Likely to React to Interest Rate
The interest rate decision influences several key markets that track Malaysia’s monetary policy closely. The FBMKLCI index reflects domestic equity sentiment tied to economic growth and interest rates. The MYRUSD currency pair is sensitive to rate differentials and capital flows. The BTCUSD pair often reacts to global risk sentiment influenced by monetary policy. The AXJ ETF tracks Asian emerging markets, including Malaysia, and responds to regional rate shifts. Lastly, the USDMYR pair is a direct inverse of MYRUSD, providing alternative currency exposure.
Interest Rate vs. FBMKLCI Since 2020
Since 2020, Malaysia’s interest rate cuts from 3.25% to 2.75% coincided with a rebound in the FBMKLCI index from pandemic lows near 1300 points to over 1600 points in 2025. The inverse relationship between rates and equity valuations highlights the stimulative effect of lower borrowing costs on corporate earnings and investor sentiment.
FAQ
- What is the current interest rate for Malaysia?
- The current interest rate is 2.75%, unchanged since July 2025.
- How does Malaysia’s interest rate affect inflation?
- Interest rates influence borrowing costs, which in turn affect spending and inflation. The current rate aims to keep inflation within the 2–3% target.
- What are the risks to Malaysia’s monetary policy outlook?
- Risks include geopolitical tensions, global trade slowdowns, and unexpected inflation spikes that could prompt rate adjustments.









The interest rate has held steady at 2.75% for three consecutive policy meetings (July, September, November 2025), following a 25-basis-point cut from 3.00% in March. This contrasts with the 12-month average rate of 2.88%, indicating a cautious easing trend over the past year.
Inflation and GDP growth charts show a clear deceleration from mid-2025 peaks. Inflation’s downward trend aligns with the central bank’s pause, while GDP growth remains stable but below pre-pandemic averages.