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    UOB expects Bank Negara Malaysia to hold the OPR until 2026 as inflation stays stable and pressures remain contained

    by VT Markets
    /
    Feb 21, 2026
    Malaysia’s headline inflation held at 1.6% year on year in January, unchanged from December. This matched the Bloomberg consensus and came in slightly below UOB’s 1.7% forecast. UOB said 4Q25 GDP growth was solid and inflation pressures remain contained. As a result, it expects Bank Negara Malaysia to keep monetary policy unchanged in the near term.

    OPR Outlook Remains Steady

    UOB continues to expect the Overnight Policy Rate (OPR) to stay at 2.75% through 2026, supported by stable inflation. The article notes it was created with help from an artificial intelligence tool and reviewed by an editor. With inflation still contained at 1.6% in January and the economy growing by a solid 3.0% in 4Q25, there appears to be little pressure on Bank Negara to act. This stability points to lower implied volatility for Malaysian assets. For derivative traders, this suggests sharp, surprise moves in interest rates are less likely in the near term. We also expect the OPR to remain steady at 2.75%, where it has been since mid-2025. The 3-month KLIBOR forward curve supports this view, pricing in almost no change for the rest of the year. This may make selling interest-rate volatility—or positioning for a range-bound outcome—a potentially attractive approach.

    FX Divergence And Hedging Considerations

    Stable domestic policy contrasts with a more hawkish US Federal Reserve, which could widen differences in interest rates. That means a steady OPR may not lead to a stronger ringgit if global rates rise. It may be worth considering hedges against potential MYR weakness, such as buying USD/MYR forward contracts. For equity derivatives, a low and stable rate environment generally supports corporate earnings. It also removes a major risk for the stock market, which can keep option premiums on the FBMKLCI relatively low. This could be a chance to build long exposure using call options with limited upfront risk. Create your live VT Markets account and start trading now.

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