BNM’s focus on economic growth rather than containing sticky inflation could spell trouble for the economy.
PETALING JAYA: Bank Negara Malaysia’s move yesterday to keep the overnight policy rate steady at 3% for the rest of the year has been welcomed by economists as the “right move” to support the economy.
He said keeping the OPR steady means the current trajectory for monetary policy will be supportive to growth. “This is because stability in the benchmark interest rate improves the predictability of financing cost,” he added. This gives confidence to markets the central bank is sticking to its mandate, and that economic growth in the coming year will not be harmed by higher interest rates, he added.
“It should be a relief to borrowers that costs of borrowing are not higher and this will support consumer spending,” he added.Pacific Research Center of Malaysia principal adviser Oh Ei Sun said while inflation remains elevated, as felt by the man in the street, economic revitalisation will remain sluggish.He opines the imperative to continue maintaining economic growth has overtaken the lowering of inflation as the primary driving factor for deciding the OPR.
With the ringgit in dire straits, the central bank has faced increased pressure to hike the OPR to defend the beleagured currency.
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