BNM: Malaysia’s Monetary Policy To Remain Unaggressive Moving Forward
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(Image: BHarian/Sairien Nafis)

Deputy governor of Bank Negara Malaysia (BNM), Datuk Abdul Rasheed Ghaffour has said that the central bank will continue to keep Malaysia’s monetary policy unaggressive in the future, with adjustments to be made when necessary.

“In terms of timeline and the level of extent of [the] adjustments itself, what is important is [that] we will not need to be aggressive. We are not in the same situation as we see in the advanced economies in terms of inflation rate and strength of demand,” said Datuk Abdul Rasheed during a conference.

Datuk Abdul Rasheed also said that BNM will need to regularly monitor Malaysia’s economic growth and inflation to make the appropriate adjustments to Malaysia’s monetary policy, namely the overnight policy rate (OPR). “The terminal rate, I think we should not be fixated on a particular number; what is important is that we need to calibrate the monetary policy that would support sustainable growth moving forward,” he emphasised.

(Image: BHarian/Sairien Nafis)

Datuk Abdul Rasheed further stressed that Malaysia’s OPR hike must be done in a measured and gradual manner to encourage steady economic growth. Any increases introduced will have to consider the timing and magnitude of market adjustment to the increase, he said.

Last month, BNM had raised Malaysia’s OPR by 25 basis points, bringing it up from a historic low of 1.75% to 2.00%. The decision was prompted by latest indicators that showed Malaysia’s economy to be improving, driven by recovering domestic demand and sustained export growth. Economists also foresee further rate hikes throughout 2022 and 2023 given this normalisation of economic activity.

(Sources: The Edge Markets, Malay Mail)

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