Bank Negara Malaysia Increases OPR To 2.75%
Bank Negara Malaysia’s (BNM) Monetary Policy Committee (MPC) has once again raised the overnight policy rate (OPR) by 25 basis points (bps), raising the OPR to to 2.75% as of Thursday, 3 (November).
This brings the ceiling and floor rates of the corridor of the OPR up to 3.0 percent and 2.50 percent, respectively.
This also marks the fourth consecutive 25bps increase this year, translating to a year-to-date increase of 100bps.
BNM’s Monetary Policy Committee decided to adjust further the degree of monetary accommodation as the latest indicators for the Malaysian economy show that economic activity strengthened further in the third quarter, driven primarily by robust domestic demand.
“Inflationary pressures were more persistent than expected due to strong demand, tight labour markets, and elevated commodity prices, despite improvements in global supply chain conditions. Consequently, many central banks are expected to continue raising interest rates to manage inflationary pressures.
“In particular, continued aggressive adjustments in US interest rates and expectations of a higher terminal rate in the US, have contributed to a persistently strong US dollar environment.” BNM said in a statement.
BNM also noted that headline and core inflation are expected to remain elevated amid both demand and cost pressures, as well as any changes to domestic policy measures. The extent of upward pressures to inflation will remain in 2023 partly contained by existing price controls, subsidies, and the remaining spare capacity in the economy.
They also mentioned that MPC is not situated on any pre-set course, stating that monetary further policy moves will continue to depend on the evolving conditions and implications on the overall outlook to domestic inflation and growth.
“The MPC is not on any pre-set course, which means that monetary policy decisions will continue to depend on evolving conditions and their implications on the overall outlook to domestic inflation and growth.
“Any adjustments to the monetary policy settings going forward would continue to be done in a measured and gradual manner, ensuring that monetary policy remains accommodative to support sustainable economic growth in an environment of price stability,” said BNM.