BNM Said 3% OPR Matches Robust State Of Economy

Bank Negara Malaysia (BNM) said the three per cent overnight policy rate (OPR) has brought back the benchmark interest rate to pre-crisis levels and is more aligned with the stronger state of the economy.

In its monetary policy statement snapshot for May 2023 released today, the central bank said the Monetary Policy Committee’s (MPC) decision to raise the OPR to three per cent from 2.75 percent previously is because the Malaysian economy is showing strength.

“It is important to ensure that our OPR is at the right level to prevent problems that can arise from long periods of low interest rates, such as too much borrowing.

“We will ensure that our OPR supports sustainable growth while keeping inflation in check,” it said, anticipating that the Malaysian economy would remain resilient, and inflation would moderate but remain elevated amid firm demand.

A check on BNM’s website showed that the OPR had been kept at three per cent since May 2019 before it was reduced by 25 basis points to 2.75 per cent in January 2020 when the COVID-19 hit.

Moving forward, the central bank expected Malaysia’s economy would continue to expand this year as large projects are progressing well and unemployment is coming down closer to pre-crisis levels, which would support household spending. Higher tourist arrivals are expected to support local businesses, it added.

On the external front, the central bank said despite some challenges, global growth is likely to be supported by the strong job market and the rebound of China’s economy.

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