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Investing.com - Bank of Malaysia (KLSE:BNMLY) is expected to maintain its current interest rate through the end of 2025, according to a new analysis from Bank of America.
The forecast comes after Malaysia’s second-quarter 2025 GDP growth surprised positively at 4.5% year-over-year, exceeding both consensus expectations of 4.4% and BofA’s own projection of 3.8%. This growth rate was slightly higher than the first quarter’s 4.4% expansion.
Construction (11%), services (5.3%), and import duties (27.9%) were the primary sectors driving the stronger-than-expected economic performance in the second quarter. Manufacturing and agriculture posted more modest growth at 3.8% and 2% respectively, while the mining sector contracted by 7.4%, likely due to planned plant maintenance.
BofA analysts maintain their base case for Bank Negara Malaysia (BNM) to remain on an extended pause, supported by their forecasts for trend-pace GDP growth of 4% or higher through 2027. The latest GDP figures suggest the economy is starting from a "higher starting point," reducing the likelihood of a 25 basis point rate cut in November 2025.
The bank continues to monitor tariff and trade developments closely, noting these factors could raise the risk of another 25 basis point cut in the first half of 2026 if conditions change.
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