Malaysia’s monetary policy remains accommodative of the country’s economy just not as the level required during the height of the pandemic as the gradual hike in the overnight policy rate (OPR) from its historical low of 1.75% to 2% will allow the market to adjust accordingly.
BNM Deputy governor Datuk Abdul Rasheed Ghaffour said Malaysia’s condition differs from that of other nations and that it is crucial to normalise the interest rate in order to stimulate the economy.
“The Monetary Policy Committee’s decision to increase the OPR by 25 basis points was based on the country’s growth trajectory, which was on a firm footing, lifted by domestic demand, apart from manageable inflation and recovery in the labour market.”
To further enhance the economy, he emphasized the need for structural reforms, including the pursuit of high-valued added industries and the attraction of high-value foreign investment.
Abdul Rasheed explained that the interest rate hike would be done in a measured and gradual manner to foster sustainable economic growth and that any increase would take into account the timing and magnitude of market adjustment to the OPR rate increase.
“The adjustment of the market to the rate hike would rely on economic growth,” he said during the Invest ASEAN 2022 conference today.
