Please pause OPR hikes to give borrowers relief, Guan Eng tells new Bank Negara governor

KUALA LUMPUR, July 1 — DAP chairman Lim Guan Eng today called on new Bank Negara Malaysia (BNM) governor Datuk Shaik Abdul Rasheed Abdul Ghaffour not to raise the overnight policy rate (OPR) again for the foreseeable future.

The Bagan MP said the upcoming Monetary Policy Committee meeting that Abdul Rasheed will chair on July 6 will be watched closely for changes to the OPR.

“Interest rate policy normalisation should not be implemented prematurely, when inflation is already declining, until robust economic growth is assured.

“Borrowers enduring higher interest costs and concerned about sustained economic growth are hoping that BNM will provide some relief by pausing OPR hikes when the inflation rate moderated to 2.8 per cent in May from 3.3 per cent in April 2023,” Lim who was also the former finance minister said in a statement.

Changes in OPR affect interest rates charged by banks.

For example, an OPR rate hike results in banks charging higher interest on borrowers' loans and giving higher interest rates for fixed deposits and savings to its customers.

Lim also said Abdul Rasheed took over at a critical time when the value of the ringgit was under pressure having depreciated to RM4.68 to the US dollar under prime minister Datuk Seri Anwar Ibrahim.

“To fulfil its mandate to promote monetary stability and financial stability conducive to the sustainable growth of the Malaysian economy, there is a need for policy alignment between BNM and the Finance Ministry led by Anwar.

“Only then can Malaysia sustain economic growth without exciting inflationary pressures in a global environment of weak global economic growth and stubborn inflationary expectations," he said.

Abdul Rasheed replaces Tan Sri Nor Shamsiah Mohd Yunus as BNM governor starting today for the next five years until June 30, 2028.

Malaysia’s OPR went up by 25 basis points on May 3, from 2.75 per cent to 3.00 per cent this year.

Last year, BNM raised the OPR four times, each time by 25 basis points.

The first hike was on May 11, 2022 from 1.75 per cent to 2.00 per cent. The second hike was on July 6, 2022 to 2.25 per cent. The third hike was on September 8, 2022 to 2.50 per cent. The fourth and last hike last year was announced on November 3, 2022 to 2.75 per cent.