Bank Negara Malaysia (BNM) has reduced the overnight policy rate (OPR) by 25 basis points to 1.75%. The ceiling and floor rates of the corridor of the OPR are lowered to 2.0% and 1.5% respectively.
This is the fourth time the central bank of Malaysia has lowered the OPR this year, following a 50-basis point slash in May, a 25-basis point cut in March, and the first cut from 3.0% to 2.75% earlier in January.
In its statement released today, BNM said that the impact of Covid-19 on the global economy is severe, with economic activity in Malaysia contracting sharply in the second quarter of the year. Following the gradual re-opening of the nation’s economy since early May, economic activities have begun to recover, supported by fiscal stimulus packages and monetary and financial measures. However, the pace and strength of the recovery remain subject to downside risks from both domestic and external factors.
“The reduction in the OPR provides additional policy stimulus to accelerate the pace of economic recovery,” Bank Negara said. “The MPC (Monetary Policy Committee) will continue to assess evolving conditions and their implications on the overall outlook for inflation and domestic growth. The Bank will continue to utilise its policy levers as appropriate to create enabling conditions for a sustainable economic recovery.”
(Source: Bank Negara Malaysia)