Kuala Lumpur, 9 Sept. 2022 – SME entrepreneurs are advised to take necessary actions by ensuring their operations and businesses continue to grow in order to mitigate the latest upward revision of the Overnight Policy Rate (OPR) by 25 basis points to 2.50 percent on 8 Sept 2022 as announced by Bank Negara Malaysia (BNM).
SME Bank Group President/Chief Executive Officer, Datuk Wira (Dr.) Aria Putera Ismail commented, “This latest upward revision reaffirms BNM’s stance in gradually normalising the OPR to tackle the upward inflationary pressure the country is facing. DOSM, in July this year, also reported that the country’s inflation has increased to 4.4 percent mainly due to food inflation which surged to 7 percent YoY in July 2022, compared to five-year pre-pandemic average of 3 percent.”
Datuk Wira Aria added, “Despite the upward trend of the OPR, Malaysia’s economy continues to record positive growth. Malaysia’s Gross Domestic Product (GDP) expanded by a robust 8.9 percent YoY as compared to 5.0 percent in the first quarter. Overall, the economy posted a growth of 6.9 percent (1H 2021: 7.0%) for the first half year of 2022 and we foresee the full year GDP could overshoot BNM’s forecast range of 5.3 percent to 6.3 percent. As economy picks up speed, there is less of a need for super accommodative monetary policy to reign in the accumulation of excessive debt.”
Mohammad Azam Ahmad, the Group Chief Risk Officer of SME Bank commented, “Key economic indicators have thus far pointed towards a firm recovery supported by solid domestic demand, base effect factors, improvement in labour market conditions and income prospects, supportive policy measures, and resilient external demand. However, downside risks to the recovery continues to stem from a weaker-than-expected global growth, elevated cost pressures, further escalation of geopolitical conflicts, prolonged supply chain disruptions and sharp tightening in financial market conditions in advanced economies, among others. To ensure sustainable economic growth and price stability, there is a need for BNM to raise the OPR so that inflation remains under control and extreme volatility in the Ringgit is prevented.”