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KUALA LUMPUR – Bank Negara Malaysia (BNM) has again raised the overnight policy rate (OPR) by 25 basis points to 2.5%.
As such, the ceiling and floor rates of the OPR corridor are also raised to 2.75% and 2.25%, respectively, the central bank said in a statement.
This is the third consecutive hike this year, after May and July.
In May, the OPR was raised to 2% from 1.75% which the central bank had maintained since July 2020 and throughout the Covid-19 pandemic.
In July this year, it was raised by 25 basis points again to 2.25%.
The decision by the central bank’s monetary policy committee is based on high inflationary pressures due to elevated commodity prices and tight labour markets, the central bank said.
“Consequently, central banks are expected to continue adjusting their monetary policy settings, some at a faster pace, to reduce inflationary pressures.”
Malaysia’s inflation was 4.4% in July, the highest in 14 months and driven by surging food prices, prompting speculation of another OPR hike.
BNM also explained that aggressive adjustments in US interest rates have contributed to a strong US dollar, which has affected the ringgit.
The ringgit yesterday sank to RM4.50 to the US dollar.
Malaysia’s economy, however, is overall on a stronger footing now than during the pandemic which is one of the reasons for raising the OPR, BNM said.
It expects the economy to grow but will also be subject to external conditions, while the inflation outlook will be affected by domestic policy measures and global commodity prices impacted mainly by the Russia-Ukraine war and supply chain disruptions. – The Vibes, September 8, 2022