Malaysia Interest Rate Decision: November 2025 Analysis and Outlook
Malaysia’s central bank held the policy rate steady at 2.75% in November 2025, maintaining a cautious stance amid moderating inflation and mixed growth signals. This decision follows a series of cuts from 3.00% in mid-2024 to 2.75% since July 2025. Core inflation eased to 2.80% YoY, while GDP growth slowed to 4.10% YoY in Q3 2025. External risks from global trade tensions and currency volatility persist. Financial markets showed muted reaction, reflecting balanced risks. Forward guidance suggests a data-dependent approach with upside inflation risks balanced by external uncertainties.
Table of Contents
The latest Interest Rate Decision for Malaysia (MY) was released on November 6, 2025, with the policy rate unchanged at 2.75%. This marks the third consecutive meeting holding rates steady after a cumulative 25 basis points cut since July 2025. The decision reflects the central bank’s balancing act amid slowing inflation and growth moderation, as well as ongoing external uncertainties.
Drivers this month
- Inflation eased to 2.80% YoY in October, down from 3.10% in August.
- GDP growth slowed to 4.10% YoY in Q3 2025, below the 4.50% average of the past year.
- Global trade tensions and commodity price volatility remain key external risks.
Policy pulse
The 2.75% policy rate remains below the 3.00% peak seen in early 2024, reflecting a modest easing cycle. The rate is consistent with the central bank’s inflation target range of 2.00–3.00%, suggesting a neutral stance aimed at supporting growth without stoking inflation pressures.
Market lens
Immediate reaction: The MYR/USD pair depreciated slightly by 0.15% in the first hour post-announcement, while 2-year government bond yields held steady near 3.10%. Breakeven inflation swaps implied a stable inflation outlook over the next 12 months.
Core macroeconomic indicators underpinning the rate decision show a mixed but cautiously optimistic picture. Inflation has moderated from a peak of 3.50% YoY in early 2025 to 2.80% in October, driven by easing food and energy prices. Meanwhile, GDP growth has decelerated from 5.00% YoY in Q1 2025 to 4.10% in Q3, reflecting softer domestic demand and global headwinds.
Inflation and growth trends
- Consumer Price Index (CPI) inflation: 2.80% YoY (Oct 2025), down from 3.10% in August.
- GDP growth: 4.10% YoY (Q3 2025), below the 4.50% average of the past 12 months.
- Unemployment rate steady at 3.20%, near historical lows.
Fiscal policy & budget
The government’s fiscal stance remains moderately expansionary, with a budget deficit of 3.40% of GDP projected for 2025. Increased infrastructure spending and targeted social programs aim to support growth, though rising debt levels (at 60% of GDP) warrant caution.
External shocks & geopolitical risks
Malaysia faces ongoing risks from global trade tensions, particularly between major partners China and the US. Commodity price volatility, especially in palm oil and petroleum, adds uncertainty. Regional geopolitical tensions in Southeast Asia also contribute to cautious sentiment.
Financial markets have priced in this steady policy stance, with 2-year government bond yields stable near 3.10%. The MYR has weakened modestly against the USD, reflecting external uncertainties and risk-off sentiment. Inflation breakeven rates remain anchored near 2.90%, consistent with the central bank’s target.
This chart highlights a stabilization phase in Malaysia’s monetary policy after a brief easing cycle. Inflation and growth indicators suggest the central bank is prioritizing stability amid external risks. Market pricing reflects balanced expectations for future rate moves.
Market lens
Immediate reaction: MYR/USD dipped 0.15% post-decision, while 2-year yields held steady. Inflation swaps suggest stable medium-term inflation expectations.
Looking ahead, Malaysia’s monetary policy trajectory will depend on inflation dynamics, growth momentum, and external developments. The central bank signals a data-dependent approach, prepared to adjust rates if inflation deviates significantly from the 2.00–3.00% target range.
Scenario analysis
- Bullish (30% probability): Inflation continues to ease below 2.50%, growth stabilizes above 4.50%, prompting potential rate cuts to 2.50% by mid-2026.
- Base (50% probability): Inflation remains near 2.80%, growth steady at 4.00–4.50%, rates held at 2.75% with gradual normalization.
- Bearish (20% probability): Inflation spikes above 3.50% due to commodity shocks, growth slows below 3.50%, forcing rate hikes back toward 3.00%.
Risks and opportunities
Upside risks include renewed inflation pressures from supply disruptions or wage growth. Downside risks stem from global slowdown or geopolitical shocks impacting exports. Fiscal policy remains supportive but constrained by debt sustainability concerns.
Malaysia’s interest rate decision in November 2025 reflects a cautious but balanced monetary stance amid evolving macroeconomic conditions. The central bank’s steady policy rate at 2.75% aligns with moderating inflation and slowing growth, while external risks warrant vigilance. Financial markets have largely priced in this outlook, with muted volatility post-announcement. Going forward, data dependency and flexibility will be key as Malaysia navigates global uncertainties and domestic challenges.
Key takeaways
- Policy rate steady at 2.75%, unchanged since July 2025.
- Inflation easing to 2.80% YoY, growth slowing to 4.10% YoY.
- External risks from trade tensions and commodity volatility persist.
- Monetary policy likely to remain data-driven with balanced risks.
Key Markets Likely to React to Interest Rate Decision
Malaysia’s interest rate decision typically influences currency, bond, equity, and commodity markets. The MYR/USD currency pair is sensitive to rate changes and external risk sentiment. Government bond yields reflect monetary policy expectations. Regional equity indices track growth outlooks, while commodity-linked stocks respond to inflation and export dynamics.
- MYRUSD – Directly impacted by interest rate shifts and external trade flows.
- KLSE – Malaysia’s equity benchmark, sensitive to growth and policy signals.
- PCHEM – Major commodity-linked stock, reacts to inflation and export trends.
- USDMYR – Inverse of MYRUSD, tracks currency strength and risk sentiment.
- BTCUSD – Crypto market often reacts to global risk appetite shifts linked to monetary policy.
Insight: Interest Rate vs. MYRUSD Exchange Rate Since 2020
Since 2020, Malaysia’s policy rate and the MYRUSD exchange rate have shown a strong inverse correlation. Periods of rate hikes coincided with MYR appreciation, while easing cycles aligned with MYR depreciation. The recent stabilization of rates at 2.75% corresponds with a relatively stable MYRUSD range between 4.40 and 4.50, reflecting balanced monetary conditions and external risk factors.
FAQs
- What was the latest Interest Rate Decision for Malaysia?
- The central bank held the policy rate steady at 2.75% on November 6, 2025, maintaining a cautious stance amid moderating inflation and growth.
- How does the Interest Rate Decision impact Malaysia’s economy?
- The decision influences borrowing costs, inflation expectations, and currency stability, affecting consumer spending, investment, and export competitiveness.
- What are the key risks facing Malaysia’s monetary policy?
- Upside inflation risks from commodity shocks and downside growth risks from global trade tensions and geopolitical uncertainties are key concerns.
Final takeaway: Malaysia’s steady 2.75% policy rate reflects a balanced approach amid moderating inflation and growth, with monetary policy poised to remain flexible as external risks evolve.
KLSE – Malaysia’s equity benchmark index, sensitive to monetary policy and economic growth.
PCHEM – Key commodity-linked stock, impacted by inflation and export trends.
MYRUSD – Exchange rate directly influenced by interest rate decisions.
USDMYR – Inverse currency pair reflecting Malaysian ringgit strength.
BTCUSD – Crypto asset reacting to global risk sentiment and monetary policy shifts.









The policy rate at 2.75% remains unchanged from last month and below the 3.00% average over the past 12 months. Inflation has trended downward from a 3.50% peak in early 2025 to 2.80% in October, while GDP growth has softened from 5.00% to 4.10% YoY over the same period.
Key figure: The 25 basis points cumulative cut since July 2025 marks a cautious easing cycle amid moderating inflation and growth.