Bank Negara Malaysia maintains OPR at 2.75% again –

For the second time this year, Bank Negara Malaysia (BNM) has decided to maintain the overnight policy rate at 2.75%, the same as it was back in January. This was announced following a meeting of its monetary policy committee (MPC) today.

According to BNM, at the current OPR level, the stance of monetary policy remains accommodative and supportive of economic growth. However, it noted that the MPC will continue to assess the impact of the cumulative OPR adjustments, given the lag effects of monetary policy on the economy. “The MPC remains vigilant to cost factors, including those arising from financial market developments, that could affect the inflation outlook,” the central back said in a statement.

“Further normalisation to the degree of monetary policy accommodation would be informed by the evolving conditions and their implications to the domestic inflation and growth outlook. The MPC will continue to calibrate the monetary policy settings that balance the risks to domestic inflation and sustainable growth,” it added.

The OPR impacts car loans, as higher rates will result in hire purchase loans becoming more expensive and be harder to gain approval. The Malaysian Automotive Association (MAA) has said it expects car sales to drop this year after a record 2022, with the OPR affecting consumer confidence and their ability to secure car loans.

BNM also said the Malaysian economy is expected to moderate in 2023 amid a slower global economy. Growth will be driven by domestic demand, while household spending will be underpinned by sustained improvements in employment and income prospects.

Additionally, tourist arrivals are expected to continue rising and lift tourism-related activities, and multi-year infrastructure projects will support investment activity. Initiatives laid out in the re-tabled Budget 2023 are also said to provide upside risks to the domestic growth outlook.

On the other hand, downside risks continue to stem mainly from global developments, including from weaker-than-expected growth outturns or much tighter and more volatile global financial conditions. The Malaysian economy expanded by 8.7% last year in 2022, driven by the recovery in private and public sector spending following the full reopening of the economy.

In the global economy, the reopening of China’s economy and better-than-expected growth outturns in major economies were deemed as positive developments. Even so, elevated cost pressures and higher interest rates continue to weigh down the global economy – headline inflation moderated slightly from high levels in recent months, but core inflation remained above historical averages.

Source: Read Full Article