Headline inflation edged up while core inflation eased slightly in April

• In April, headline inflation edged up to 1.9% (March 2026: 1.7%) while core inflation^[1] eased slightly to 2% (March 2026: 2.1%).
• The uptick in headline inflation is as expected and mainly reflected higher retail fuel prices (particularly for RON97 and diesel in Peninsular Malaysia), in line with higher global oil prices.
  • The impact of higher global oil prices on fuel inflation was moderated by continued targeted subsidies on RON95 and diesel.^[2]
• This was partly offset by slower inflation in jewellery and watches amid lower global prices for gold, platinum and silver.

Trade surplus widens on strong export performance, led by E&E

• The trade surplus increased to RM28.8 billion (March 2026: RM24.6 billion), driven by strong exports that more than offset the rise in imports.
• Exports grew strongly by 36.9% (March 2026: 8.3%), driven by:
  • Strong E&E exports (46.4%; March 2026: 15%), particularly semiconductors (65.4%; March 2026: 34.8%) and office machinery parts (228.7%; March 2026: 7.7%) amid sustained global tech demand.
  • Non-E&E exports also strengthened (33.2%; March 2026: 3.8%), supported by higher petroleum product prices.
• Imports growth expanded to 20% (March 2026: 10.4%) amid higher re-export activities.

Higher growth in credit to the private non-financial sector

• Credit to the private non-financial sector grew by 5.8% (March 2026: 5.6%), driven by higher growth in outstanding business loans (6.3%; March 2026: 5.7%) and outstanding corporate bonds (6.1%; March 2026: 5.8%).
• Business loan growth increased following higher loan growth among non-SMEs, particularly for working capital purposes. Meanwhile, growth for investment-related^[3] loans remained forthcoming across both SMEs and non-SMEs.
• Household loan growth was sustained at 5.5% (March 2026: 5.4%) amid steady loan growth across most purposes.

Banks’ asset quality remained intact

• Gross and net impaired loans ratios continued to be stable at 1.4% and 0.9%, respectively.
• Loan loss coverage ratio (including regulatory reserves) remained prudent at 125.4% of gross impaired loans (March 2026: 124.8%).

Banks maintained sufficient liquidity buffers to withstand against liquidity shocks

• The banking system continued to record healthy liquid asset buffers with an aggregate Liquidity Coverage Ratio of 152.8% (March 2026: 144.6%).

Global and domestic financial markets benefited from improved sentiment following a ceasefire in the war in the Middle East

• Global financial markets were lifted by improved risk sentiment following a ceasefire in the Middle East war during the month. This was accompanied by a weakening of the US dollar and some easing in global financial conditions.
• Against this backdrop, the ringgit appreciated by 1.7% against the US dollar (NEER:^[4] 0.9%; regional average:^[5] 0.2%), supported by net foreign inflows into domestic bond and equity markets.
• Domestic bond and equity markets rebounded during the month, in line with regional movements. The 10-year MGS yield declined by 6 bps (regional average: -3.5 bps) while the FBM KLCI rose by 1.9% (regional average: 6.2%).

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Bank Negara Malaysia
29 May 2026