Malaysia Should Focus On Macroeconomic Stability While Safeguarding Critical Buffers - BNM
KUALA LUMPUR, May 15 (Bernama) -- Malaysia's near-term policy priorities should focus on preserving macroeconomic stability while safeguarding critical buffers amidst the global supply shock due to the West Asia conflict.
In a box article in Bank Negara Malaysia's (BNM) quarterly bulletin, the central bank said the immediate priority is to secure essential supplies and prolong the use of existing buffers, such as fuel inventories and critical inputs, to cushion the supply shock.
"Policy responses should remain prudent, targeted and proportionate, focusing on managing cost pressures and preventing disorderly price adjustments while protecting the most affected segments of the economy.
"In addition to the continuation of targeted subsidy measures, BNM has also introduced SME Stabilisation Relief Facility (SME SRF), a RM5 billion financing facility to support viable SMEs affected by the conflict," it said.
BNM Governor Abdul Rasheed Ghaffour said targeted efforts by the government, financial institutions, businesses and households would be crucial in helping the country weather the ongoing shocks.
"We need to look into targeted measures that need to be given to the affected sectors as well. By doing so, we will be able to sustain our growth projection.
“Everyone has a role to play. The government will step in to ensure adequate supply and assistance for affected families, while banks can also help by providing some kind of assistance to those affected,” he told a press conference after announcing Malaysia’s gross domestic product (GDP) performance for the first quarter of 2026.
Together with credit guarantee schemes and ongoing financing support, these measures help cushion near-term cash flow pressures and ensure continued access to working capital, said BNM.
At the same time, preserving monetary and financial stability remains essential as the Monetary Policy Committee (MPC) acknowledges the uncertainties from the ongoing conflict in the Middle East.
It said the impact on the global and Malaysian economies will depend on how the situation unfolds.
"At the current Overnight Policy Rate (OPR) level, the MPC considers the monetary policy stance to be appropriate and consistent with the outlook of continued price stability and sustainable economic growth.
“The MPC will remain vigilant to ongoing developments and assess the balance of risks surrounding the outlook for domestic inflation and growth," it said.
Additionally, BNM noted that strengthening national food and energy security, diversifying import sources, and enhancing domestic supply capacity are critical to reducing vulnerability to external shocks.
Efforts to deepen regional and alternative trade linkages, as well as accelerate the transition to renewable energy and the green economy, could help mitigate supply chain disruptions and reduce reliance on fossil fuels and global energy price volatility.
In conclusion, Malaysia, as a small and open economy, is not fully insulated from these developments, it said.
Ultimately, the magnitude of the macroeconomic impact will depend on the persistence and severity of the conflict, as well as the effectiveness of policy responses and firm-level adjustments in mitigating spillovers to the real economy.
"Policy efforts remain focused on preserving macroeconomic and financial stability. This includes ensuring orderly financial conditions, supporting affected households and firms through targeted measures, and safeguarding domestic supply conditions.
"Continued vigilance and policy flexibility will therefore be critical to contain second-round effects arising from higher costs, trade disruptions, and shifts in financial market sentiment amid an uncertain global environment," added BNM.
-- BERNAMA