Guan Eng asks BNM to resist urge to raise interest rates

KUALA LUMPUR, March 31 — Former finance minister Lim Guan Eng said Bank Negara Malaysia (BNM) should continue its pause on raising the overnight policy rate (OPR) and support the government’s policy objectives.

The DAP chairman said BNM should prioritise Prime Minister Datuk Seri Anwar Ibrahim’s three key goals of combating the cost-of-living crisis, generating economic growth in the face of a global slowdown, and combating corruption to ensure the unity government’s stability.

“The first step that (BNM governor) Tan Sri Nor Shamsiah Mohd Yunus should do is to arrest any increase in cost of living by continuing its pause of any increases in the OPR to cushion individual and business borrowers from any added financial costs.

“With inflation moderating to 3.7 per cent in February 2023, there is no need for any interest rate hikes,” he said in a statement.

Lim further said BNM’s halt in interest rate hikes has not caused the ringgit to depreciate against the US dollar, after it previously rose from a low of RM4.75 during the previous administration to the current RM4.41.

“In other words, hikes or cuts in the OPR have no discernible effect on the value of the ringgit against the US dollar, which is determined by external factors beyond the country’s control,” he said.

Holding off on further rate increases would also show BNM’s “heart” for small businesses and individuals, he added.

Besides that, he said that BNM should assist the government in establishing political stability so that investors can be reassured with a “progressive, competent, transparent and inclusive government” rather than an “extremist, racist and incompetent, dishonest government devoid of any rational economic planning”.

On March 16, national news agency Bernama reported that the Monetary Policy Committee (MPC) decided in a second consecutive meeting to maintain the OPR at 2.75 per cent.

Last year, it had raised the rate by 25 basis points four times, with the last time in November.

In February, the national news agency reported Nor Shamsiah as saying that any decision on the OPR would not solely be based on other central banks but instead focused on the domestic economic environment.

She reportedly added that the current inflation in Malaysia was due to a combination of both supply and demand factors.