20th January 2022 - 2 min read
Bank Negara Malaysia (BNM) has announced that it will continue to hold the overnight policy rate (OPR) steady at 1.75%. This is the eighth meeting in which the Monetary Policy Committee (MPC) has decided to maintain the OPR at its current rate since the last adjustment was made in July 2020.
In a statement, the MPC said that the current stance of monetary policy is both appropriate and accommodative. “Fiscal and financial measures will continue to cushion the economic impact on businesses and households, and provide support to economic activity. The stance of monetary policy will continue to be determined by new data and their implication on the overall outlook for inflation and domestic growth,” it said.
The central bank also commented that in 2022, growth is expected to gain further momentum, driven by the expansion of demand and higher private sector expenditure. Improvements to the labour market and continued policy support will also contribute to the growth, it said.
“Risks to the growth outlook, however, remain tilted to the downside. Such risks may arise from a weaker-than-expected global growth, a worsening in supply chain disruptions, and the emergence of severe and vaccine-resistant Covid-19 variants of concern,” BNM cautioned.
Additionally, the central bank shared that the average headline inflation between January to November 2021 had been recorded at 2.3%. For 2022, it is forecasted to remain moderate, especially as the base effect from fuel inflation lessens.
Meanwhile, underlying inflation will likely grow as businesses begin operating again with high input costs. “Nevertheless, core inflation is expected to be modest, with upside risk contained by the continued slack in the economy and labour market,” BNM further said, adding that the outlook will also be affected by global commodity price developments amid risks from prolonged supply-related disruptions.
Back in 2020, BNM had slashed the OPR by a total of four times to bring it to the current low of 1.75%. The central bank first reduced the rate from 3.0% to 2.75% in January 2020, then to 2.50% in March. Following that, BNM again slashed the OPR by 50 basis point in May, and finally, by another 25 basis points in July.
(Source: BNM)
Subscribe to our exclusive weekly newsletter and we’ll bring you the week’s highlights of financial news, expert tips, guides, and the latest credit card and e-wallet deals.
Stay tuned for what’s to come next in the personal finance world
Comments (0)