KUALA LUMPUR, July 8 — The Congress of Unions of Employees in the Public and Civil Services (Cuepacs) has decried Bank Negara Malaysia’s (BNM) recent increase of the Overnight Policy Rate (OPR).

In a statement today, Cuepacs president Datuk Adnan Mat said the OPR increase would result in a reduction of spendable income for those in the bottom 40 per cent (B40) and middle 40 per cent (M40) income groups.

"Most of the loans made by this group are loans for needs such as car and home loans, as well as personal loans.

"Even more distressing is if the loans they took were during the low OPR around July 2020 to May 2022.

"Definitely the drastic increase in OPR this time will result in reduced disposable income because their existing income must be channeled to meet the increase in borrowing costs,” he said.

Adnan also said that the government needs to look "outside the box” to figure out ways to bring down inflation, as in his view, the government is making an assumption that an increase in the OPR can reduce the rise in inflation.

This assumption, he said, could not be conclusively accepted.

"Currently Cuepacs does not see any guarantee from the government to stabilise the rising prices of goods

"Although BNM informed that the decision to increase the OPR was made to curb the increase in the country’s inflation rate, Cuepacs does not feel that the price of basic goods, which rose so sharply this time, could be lowered just like before the increase,” he said.

However, Adnan acknowledged that the government can’t directly interfere in any monetary policy-related measures by BNM, including the increase in the OPR.

On Wednesday, Bank Negara Malaysia (BNM) increased its OPR by 25 basis points to 2.25 per cent after its fourth Monetary Policy Committee (MPC) meeting this year.

That was the second consecutive increase this year after BNM raised the OPR by 25 basis points to 2.00 per cent during its previous meeting in May.