Governor: Decision on OPR to be data-driven

BNM will engage in public consultations in 2Q and 3Q this year to set a new limit on cash transactions


The prospect of an adjusted Overnight Policy Rate (OPR) in the upcoming Monetary Policy Committee (MPC) meeting will be data-driven, said Bank Negara Malaysia (BNM) governor Datuk Nor Shamsiah Mohd Yunus.

She added that the decline in the country’s inflation rate since January does not reflect deflationary conditions.

“We will look at both internal developments and how inflation can affect the economy, as well as the development of conditions in the financial market.

“It is a confluence of all the factors that we will take into account to say that a policy adjustment is needed.

“The recent negative inflation was mostly due to the lower domestic fuel prices, and it is different from a drop in spending where firms generally have to cut prices to attract consumers,” she said at the press conference in Kuala Lumpur yesterday.

The MPC will next meet on May 7. The Consumer Price Index (CPI) fell 0.4% year-on-year (YoY) in February. In January, the CPI dropped 0.7% YoY, the first time since November 2009, due to the lower fuel costs.

“The central bank is comfortable with the ringgit performance as it has not been ‘out of whack’.

“It has been performing in line with other regional currencies and its volatility has been low,” Nor Shamsiah said. She said the central bank will engage in public consultations in the second quarter (2Q) and 3Q this year on setting a new limit on cash transactions.

“We would like to take this for public consultation whether this is something beneficial for Malaysians to adopt, whether it will move to a right direction and what is the appropriate limit,” she said.

The central bank lowered the daily cash transaction report to RM25,000 effective Jan 1, 2019, as the previous threshold of RM50,000 was too high and disconnected from Malaysians’ purchasing power.

In BNM’s Annual Report 2018, the central bank declared a dividend of RM2.5 billion to be paid to the government on the back of a RM7.5 billion net profit for the financial year ended Dec 31, 2018 (FY18).

BNM’s total assets amounted to RM447.6 billion at the end of 2018.