In a statement today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia announced the increase to the Overnight Policy Rate (OPR) to 2.25 percent.
This brings the ceiling and floor rates of the corridor of the OPR up to 2.50 percent and 2.00 percent, respectively.
BNM highlighted that economic activity has continued to strengthen in recent months but upward pressures on inflation will remain.
“Year-to-date, headline inflation has averaged 2.4%. While it is projected to remain within the 2.2% – 3.2% forecast range for the year, headline inflation may be higher in some months due mainly to the base effect from electricity prices.
“Underlying inflation, as measured by core inflation, is expected to average between 2.0% – 3.0% in 2022 as demand continues to improve amid the high-cost environment,” the statement added.
In the past, the OPR was reduced by a cumulative basis points of 125, taking it to a historical low of 1.75% in July 2020 to help support the economy, as it was struggling due to the effects of the pandemic.
Amid the positive growth prospects for the Malaysian economy, the MPC decided to further adjust the OPR as conditions that required the historically low OPR are receding.