FX.co ★ Malaysia Delivers 25bps Rate Cut as Expected

In July 2025, the Central Bank of Malaysia reduced its benchmark interest rate by 25 basis points to 2.75%, reflecting market predictions. This adjustment marks the first rate reduction in five years, highlighting the bank's dedication to bolstering domestic economic activity amid a less favorable growth outlook and increasing global trade challenges. Over the first five months, headline and core inflation averaged 1.4% and 1.9%, respectively. For the entire year, inflation is projected to stay moderate, aided by controlled global cost pressures and a lack of major inflation driven by internal demand. During the first quarter of 2025, Malaysia's GDP grew by 4.4% year-on-year, in line with forecasts but down from a revised 4.9% increase in the previous quarter. Indicators point to sustained economic vigor in the second quarter, supported by consistent domestic spending and stable export performance.