Bank Negara Malaysia Increases OPR To 2%
In a press release today, Bank Negara Malaysia has announced that their Monetary Policy Committee (MPC) has decided to increase the Overnight Policy Rate (OPR) by 25 basis points, which puts it up to 2.00%.
With this increase, the ceiling and floor rates of the OPR also increased, at 2.25% and 1.75% respectively.
According to the press release, the sustained reopening of the global economy and the improvement in the labour market conditions have continued to support the recovery of economic activity. This has cushioned the impacts of several global happenings, such as the military conflict in Ukraine and the stringent containment measures in China.
Meanwhile for the Malaysian economy, latest indicators have shown that the economy’s growth is on a more stable footing, due to the strengthening of domestic demand while still sustaining export growth. The labour market is also being supported by various factors, such as the lower unemployment rate and prospect of better income.
BNM also foresees that the economic activity will be further strengthened thanks to the shift to the endemicity of COVID-19, which took place on the 1st of April 2022. BNM also projected that headline inflation to average between 2.2% – 3.2% in April 2022.
In the past, the OPR was reduced by a cumulative basis points of 125, taking it to a historical low of 1.75% to help support the economy, as it was struggling due to the effects of the pandemic.
However, with domestic growth now on a more stable footing, the MPC has decided to reduce the degree of monetary accommodation provided. BNM assured that this will be done in a gradual and measured manner, in order to ensure that monetary policy remains accommodating to support a sustained economic growth.