LIM Guan Eng has called on Bank Negara Malaysia (BNM) to maintain the overnight policy rate (OPR) at 2.75 % in the next monetary policy committee (MPC) meeting tomorrow. 

The DAP chairman said that any increase in OPR would naturally increase workers’ borrowing costs and reduce their disposable income.

“As we celebrate Workers’ Day, the principal concern for Malaysia’s 16.8 million labour force is cost of living and income, or a fair living wage.\

“The unemployment rate has receded to 3.5%, or 592,000 workers in February 2023, from 3.6% in January 2023, indicating continued momentum for economic growth to generate income to match cost-of-living pressures.”

“There is no need for BNM to raise the OPR or interest rates now that the March Consumer Price Index has eased to 3.4% from 3.7% in February 2023,” said Lim.

In January, it was reported that BNM was expected to raise the OPR again to 3% from 2.75%, reversing Covid-induced rate cuts.

According to Standard Chartered Global Research, robust growth, elevated and broad-based inflation are set to prompt further tightening of monetary policy in the country.

It said growth remains strong in Malaysia, with full-year 2023 GDP expected to come in at 8.8%.

Speaking further, the former finance minister said the focus should now be on generating economic growth. 

He added that in view of the current global economic downturn, sustaining economic growth is challenging as recession is projected to hit the United States.

“The inability to sustain economic growth from raising OPR and the further burden of any higher financial costs may cause small businesses to close and cause unemployment.

“May Day celebrations today would be muted and meaningless if BNM increases the OPR at its meeting tomorrow.

“The only beneficiary from increasing interest rates would be banks, helping to increase their interest margins and profits. BNM must demonstrate that it has a heart for the sufferings faced by workers by standing together in solidarity with our labour force,” Lim said. – May 1, 2023.