Malaysia Keeps Its Policy Rate at 2.75% While House Prices Sit Almost Still

Bank Negara Malaysia held the overnight policy rate at 2.75% on 3 September, with inflation at 1.8% and national house prices up just 1.7% a year.

Bank Negara Malaysia left the overnight policy rate at 2.75% at its 3 September meeting, in line with what economists had expected. Headline inflation averaged 1.8% over the first seven months of 2026 and core inflation 2.0%, while the economy expanded 5.7% in the first half; the central bank projects growth of about 5% for the full year. For a housing market where the national price index has risen 1.7% over twelve months, the more interesting part of the statement was not the decision but the wording.

One word removed

BNM dropped "appropriate" from its description of the policy stance, saying instead that the stance is "consistent with the outlook of continued price stability and sustainable economic growth". It also said it would "remain vigilant towards cost pressures and domestic demand conditions". OCBC Global Markets Research read this as a modest hawkish bias and now expects the rate to rise to 3.00% in January 2027. BNM noted that wage pressures remain contained and cost pass-through uneven, which is what keeps the current level defensible for now.

The price index has stopped rising

Malaysia's official house price index, published by NAPIC, showed a 1.7% annual increase in the first quarter of 2026 — and a quarter-on-quarter fall, from 134.5 to 133.6. That figure is still flagged as preliminary, and a check of NAPIC's release archive on 4 September found no second-quarter publication yet. Glopra's data puts the Malaysian national average at $1,050 per square metre on a transaction basis, with a gross rental yield of 5.27% and a bubble-risk score of 53, in the moderate band. That combination — low prices, mid-range yield, flat index — is unusual among the markets we track and is not what a rate-driven correction looks like.

The cost that did move

For foreign buyers, the more consequential change this year was not monetary. Memorandum of transfer stamp duty for non-citizens moved from a flat 4% to a flat 8% on 1 January 2026 under the Finance Act 2025 (Act 874, section 29(b)) — a statutory change recorded in Glopra's Malaysia market file, where the entry also notes that MM2H residence holders are treated as foreign for this purpose. Four extra percentage points of unrecoverable cost at entry is a larger number than a single 25 basis point move in the policy rate would add to a year of interest on a typical loan. Buyers comparing Malaysia with regional alternatives on headline price alone are looking at the smaller of the two figures.

What to watch next

Three dates carry the story forward: NAPIC's Q2 2026 index, expected late September or October, which will show whether the first-quarter dip was noise or a turn; the January 2027 BNM meeting that OCBC has flagged; and any revision to the Q1 preliminary figure. An economy expanding at about 5% while its house price index moves 1.7% is an unusual pairing, and it is the gap between those two numbers — not the level of either — that will decide whether the next NAPIC release reads as a pause or a turn.

Sources: Bank Negara Malaysia, Monetary Policy Statement, 3 Sep 2026 https://www.bnm.gov.my/-/monetary-policy-statement-03092026; BusinessToday Malaysia, 3 Sep 2026 https://www.businesstoday.com.my/2026/09/03/bnm-on-hold-but-changes-in-tone-ocbc-sees-opr-raised-to-3-in-january/

Market data: Malaysia