KUALA LUMPUR – Following its third Monetary Policy Committee (MPC) meeting for 2022, Bank Negara Malaysia (BNM) announced the increase of the OPR (overnight policy rate) to 2.5%.
In a statement released on Sept 8, the central bank said that the current ceiling and floor rates of the corridor of the OPR are now set at 2.75% and 2.25% respectively.
According to BNM, inflation is still considerably high due to the soaring commodity prices and tight labour markets although there have been improvements to the global supply chain conditions.
Malaysia’s year-to-date headline inflation averaged at 2.8% with it projected to hit an all time high in the third quarter of the year before easing due to dissipating base effects and in line with the expected easing of global commodity prices.
“Underlying inflation, as measured by core inflation, is anticipated to average closer to the upper end of the 2.0% – 3.0% forecast range in 2022, with some signs of demand-driven pressures amid the high-cost environment.
“The extent of upward pressures to inflation will remain partly contained by price controls currently in place, fuel subsidies, and the prevailing spare capacity in the economy,” the central bank explained.
Additionally, it said that the inflation outlook remains susceptible to domestic policy actions as well as global commodity price movements resulting primarily from the ongoing military situation in Ukraine and extended supply-related disruptions.
BNM also believes that other central banks will also continue to review their monetary policy settings, with some likely to do so at a faster pace to combat inflation.
The third MPC meeting is the third time in 2022 where BNM has increased the OPR in order to tame inflationary pressures in the country.
In May and July, the MPC meetings had also concluded in a 25 basis point increase from 1.75% to 2.0% and 2.0% to 2.25% respectively.
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