BANK Negara Malaysia (BNM) should hold the pause on overnight policy rate (OPR) hikes for the sake of small businesses and the people, said former finance minister Lim Guan Eng.

He said bank governor Nor Shamsiah Mohd Yunus should align the central bank’s policies with those of Anwar Ibrahim’s unity government.

“The first step that Nor Shamsiah should do is to arrest any increase in cost of living by continuing its pause of any increases in the OPR to cushion individual and business borrowers from any added financial costs.

“With inflation moderating to 3.7% in February 2023, there is no need for any interest rate hikes,” said the Bagan MP.

Analysts have predicted that BNM will likely increase the OPR by 25 basis points in July, citing economic forecasts driven by strong domestic demand following recovery in the employment sector.  

Lim added although Nor Shamsiah had proposed six structural reforms, Anwar’s three key goals should be prioritised.

He said Bank Negara should actively assist the government to establish political stability to reassure investors Malaysia has a progressive and inclusive government instead of an extremist and incompetent government incapable of rational economic planning.

“Whilst the six key structural reforms proposed by Nor Shamsiah to enhance Malaysia’s competitiveness and growth potential is a desired long-term goal, the three key goals of Anwar should be prioritised to ensure the stability of the unity government from being undermined by racists and extremists.”

Lim said OPR hikes and cuts have no discernible effect on the value of the ringgit against the US dollar, which is determined by external factors beyond the country’s control. – March 31, 2023.