KUALA LUMPUR, May 8 — Monetary policy is primarily a demand management tool. As such, it is generally a less appropriate tool in addressing supply-driven shocks, such as rising fuel and commodity prices, according to Bank Negara Malaysia (BNM) Governor Datuk Seri Abdul Rasheed Ghaffour.

Moreover, monetary policy is a blunt policy tool that affects the entire economy. In cases of supply shocks, targeted solutions may be more prudent and effective, he said.

However, Abdul Rasheed said BNM remains vigilant should price pressures becoming more widespread and persistent.

“If price pressures from these supply shocks become more pervasive and prolonged, then there may be a role for monetary policy intervention,” the governor said in an interview with Bernama.

He said support mechanisms are already in place and are being proactively communicated to affected businesses.

Abdul Rasheed stressed that it is vital to maintain a prudent and disciplined approach to fiscal and monetary policy to preserve financial buffers in case conditions worsen.

“Rather than introducing a blanket stimulus package, assistance will focus on specific sectors and businesses facing genuine financial difficulties,” he said. — Bernama