THE Ministry of Finance is monitoring the effects of the increase in the overnight policy rate (OPR) on consumer loan repayments.

Deputy Finance Minister I Mohd Shahar Abdullah said Bank Negara Malaysia’s (BNM) decision to increase the OPR by 50 basis points to 2.25% was made when the economic indicators were showing positive signs.

“When the economic indicators are showing positive signs, such as the unemployment rate decreasing and foreign direct investment (FDI) increasing, it is timely for BNM to increase the OPR.

“Compared to the situation before the pandemic, it is still under control.

“Thus, the Finance Ministry, through BNM, is explaining to the people our actions using the media and social media,” he said during a question-and-answer session at the Dewan Negara sitting today following a question from Senator Nuridah Mohd Salleh.

Nuridah had asked about the expected duration of the current economic situation and what truth there was in the country heading towards hyperinflation.

Shahar said various measures have been implemented by the government to control the increase in prices of basic goods and services, including price controls on selected goods and services, particularly through the provision of fuel and selected food subsidies, as well as electricity rebates for domestic consumers.

He said the move has helped ensure the inflation rate in Malaysia for June this year was at a moderate level compared to other countries.

The inflation rate was 3.4% in June, driven by the group of food and non-alcoholic beverages (6.1%), transport (5.4%), and restaurants and hotels (5%).

“This step can further prevent hyperinflation, which is when the inflation rate remains at a very high level from one month to the next, so much so that it can erode the value of a country’s currency.

“In addition, the current financial and monetary policies remain accommodative in ensuring that the country’s inflation is at a controlled level,” he said. – Bernama, August 8, 2022.