By AZALEA AZUAR / Pic By MUHD AMIN NAHARUL
BANK Negara Malaysia’s (BNM) decision to maintain the Overnight Policy Rate (OPR) at 1.75% is wise since the country’s economy is heading towards recovery, said iProperty.com.my country manager Shylendra Nathan.
He said if the central bank were to increase the OPR rate, it should be done progressively, depending on the economic situations.
“A gradual increase over a span of say one year will allow Malaysians to adapt to rising interest rates and better prepare their finances in anticipation of further economic recovery.
“Furthermore, it will give consumers ample time to enjoy a low interest-rate environment, opening up funds for essential needs such as household items and healthcare treatment,” he said in a statement last Friday.
The high vaccination rates among adults (62%) and children (24%) has positioned Malaysia for an economic upswing and given opportunities for many businesses to reform.
“Furthermore, key industries such as property and tourism could likely see accelerated recoveries as Malaysian borders are anticipated to reopen in the second quarter of the year.
“With the new standard operating procedures (SOPs) for lifting restrictions, we hope to see returning international travellers to Malaysia.”
BNM maintained the OPR at 1.75% at its second Monetary Policy Committee meeting of the year last Thursday after evaluating factors including the Russia-Ukraine conflict, which has emerged as a key risk to global economic growth, trade prospects, cost pressures from higher commodity prices and volatile financial markets.
The OPR has been maintained at 1.75% since July 7, 2020.
The central bank said risks to the growth outlook remain tilted to the downside due to external and domestic factors. These include weaker than expected global growth, ongoing geopolitical conflicts, worsening supply chain disruptions and developments surrounding Covid-19.
“Headline inflation in 2022 is projected to remain moderate as the base effect from fuel inflation continues to dissipate.
“Underlying inflation, as measured by core inflation, is expected to normalise to around its long-term average as economic activity continues to pick up amid the environment of high input costs,” BNM said.