KUALA LUMPUR, May 12 ― DAP’s Lim Guan Eng has today labelled Bank Negara Malaysia’s (BNM) recent announcement on the overnight policy rate (OPR) hike as “unhelpful” in boosting business confidence in Malaysia.
In a statement, Lim said the “nasty surprise” of an OPR hike will be felt most by bank borrowers, especially those with existing personal financial commitments as well as small-medium enterprises.
“Apart from borrowers, the economy may also suffer with a higher interest rate affecting economic growth already affected by global uncertainties of a US-led global recession.
“The surprise hike in the OPR by Bank Negara definitely does not help to boost business confidence,” he said.
On May 3, BNM announced the OPR is up by 25 basis points to 3 per cent.
The country’s central bank said the revised OPR was a reflection of the pre-crisis period rates and is more in line with the improved state of the economy.
Just two days before the announcement, Lim had called for BNM to maintain its OPR at the current 2.75 per cent as a hike could potentially cause small businesses to close and cause unemployment.
While the OPR hike was supposed to help boost the strength of the local currency against the US Dollar, Lim said this was not the case as the currency had depreciated in less than 10 days.
“Clearly the value of the ringgit is not determined by sound economic fundamentals, solid economic performance, growth rates or OPR set by BNM but more a function of interest rate expectations of the US Federal Reserve,” he said.
Lim also said the OPR hike was unnecessary as inflation fell from 3.7 per cent in February to 3.4 per cent ― a 34-months low ― in March, thus negating the need for a raise as previously rationalised.
