DAP chairman Lim Guan Eng has questioned Bank Negara Malaysia’s (BNM) recent decision to increase its overnight policy rate (OPR) by 25 basis points to 3%.

In a statement, he said if BNM was concerned about headline and core inflation, it should have raised the OPR in January and March 2023, when inflation for the final quarter of 2022 was higher.

“This has caused some confusion because core inflation had in fact moderated to 3.9% in the first quarter of 2023 (announced in April this year), compared to 4.2%  in the final quarter of 2022 (announced in January this year).

“If core inflation is such a big concern, why were there two interest rate pauses of no hikes in OPR in January and March 2023, even though core inflation was higher at 4.2% during the final quarter of 2022, compared to 3.9% in the first quarter of 2023?

“BNM should have immediately hiked up the OPR in January and March 2023 when inflation for the final quarter of 2022 was higher and not wait until now,” he said.

On Friday, BNM governor Nor Shamsiah Mohd Yunus stood by the OPR hike, saying it was a prudent response to prevailing economic conditions and also denied the increase led to a rise in bankruptcies.

The former finance minister argued that the surprise OPR hike caused unnecessary financial hardship to borrowers, particularly individuals and small and medium enterprises (SMEs).

“Despite BNM not hiking up the OPR in January and March this year, both headline and core inflation decreased to 3.4% and 3.8% respectively in March 2023. Both headline and core inflation were already being reined in despite no hikes in OPR.

“This questions the rationale of BNM’s surprise OPR hike on May 3 in the absence of any evidence of a resurgent inflation. This has instead caused unnecessary financial hardship to borrowers, particularly individuals and SMEs.” – May 14, 2023.