THE Overnight Policy Rate (OPR) will be maintained at 2.75% as the global economy remains to be affected, Bank Negara Malaysia (BNM) said.

The central bank said maintaining the OPR would allow it to assess the impact of the cumulative past OPR adjustments given the lag effects of monetary policy on the economy.

“Today’s OPR results allow the Monetary Policy Committee (MPC) to assess the effect of the OPR adjustment cumulatively considering the lag effect of monetary policy on the economy.

“At the current OPR level, the monetary policy stance remains accommodative and supportive of economic growth.

“The next steps to return the level of monetary policy accommodation to the appropriate level will be determined by the changing conditions and their impact on the domestic inflation and growth outlook.

“The MPC will continue to set a monetary policy that balances the risks of domestic inflation and sustainable growth,” BNM said in a statement today.

The OPR sank to its lowest ever – 1.75% – in early 2020 after the global outbreak of Covid-19.

However, last year, the rate was raised four times to 2.75%. 

BNM said the latest data that Malaysia recorded economic expansion in the last quarter of 2022. 

With that, it said that the growth for last year is expected to exceed to the earlier projected range of 6.5-7.0%.

Domestic demand is expected to support growth.

BNM said headline inflation averaged 3.4% for the period of January to November last year.

“For 2023, headline and core inflation are expected to moderate but remain at a high level levels amid lingering demand and cost pressures.

“Existing price controls and fuel subsidies as well as the remaining spare capacity in the economy, will continue to contain some of the increased level of inflationary pressure,” it said. – January 19, 2023.