A commitment to long-term initiatives such as fiscal consolidation and economic reforms will drive demand for the ringgit.
Bank Negara Malaysia is expected to keep the overnight policy rate unchanged at 3% when it concludes its Monetary Policy Committee meeting tomorrow.
Commenting on deputy finance minister Ahmad Maslan’s recent statement that raising the OPR may no longer be “relevant” with headline inflation falling below 2%, Afzanizam said a higher OPR can result in slower economic growth. As a result, it may limit borrowing and spending by individuals and businesses, potentially causing economic challenges.
“If these policies are effectively implemented, it could result in an upgraded credit rating for the nation, which is crucial for Malaysia’s long-term growth prospects,” he said. “In theory, under the assumption that all other economic factors such as gross domestic product , government debt, consumer spending, and business investments remain constant, this approach would be effective,” said Oh.
Bank Negara Malaysia surprised observers in May when it decided to raise the OPR by 25 basis points from 2.75% to 3%, after hitting the pause button at the Monetary Policy Committee’s meetings in January and March.
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