KUALA LUMPUR, 11 November 2022 – The recent revision of the Overnight Policy Rate (OPR) by 25 basis points to 2.75 percent on 3 November 2022 as announced by Bank Negara Malaysia (BNM) is necessary to ensure the country can manage inflationary pressure and sustain economic growth moving forward.
SME Bank Group President/Chief Executive Officer, Datuk Wira (Dr.) Aria Putera Ismail commented, “In line with global development, the increase in OPR signifies BNM’s strong emphasis on data and understanding of the domestic economic landscape in deciding the upward revision of the OPR. The decision is supported by the country’s strong domestic demand, healthy household spending backed by improved labour market condition and income prospects as well as increased tourist arrivals.”
Datuk Wira Aria added, “The decision to gradually increase the OPR rates will avert bouts of heightened volatility arising from the global financial and foreign exchange markets as we navigate external headwinds which include the possibility of slower global growth. The Department of Statistics Malaysia (DOSM) in September this year, reported that the country’s inflation stood at 4.5 percent (August: 4.7 percent mainly due to food inflation which increased at a slower rate of 6.8 percent compared to 7.2 percent a month ago).”
Lynette Lee, the Chief Economist commented, “Malaysia’s economic activities continued to strengthen further in the third quarter, driven mainly by robust domestic demand. Although headline inflation has likely peaked in 3Q 2022, it is expected to moderate, albeit remaining elevated moving into 2023. Given both demand and cost pressures, the inflation outlook is tilted to the upside subject to global commodity price developments and domestic subsidy policy. We expect BNM to further adjust the degree of monetary accommodation in early 2023 in a gradual manner, to balance the risks between domestic inflation and sustainable growth.”