BNM’s halt in interest rate hike a welcome respite for bank borrowers – Guan Eng

DAP Chairman Lim Guan Eng with Bukit Bendera Member of Parliament Syerleena Abdul Rashid at an event to distribute Mandarin oranges in conjunction with the upcoming Chinese New Year celebration. Photo courtesy of Lim Guan Eng Facebook.

KUALA LUMPUR, Jan 19 – Bank Negara Malaysia’s (BNM) decision today to maintain the overnight policy rate (OPR) at 2.75 percent, following a series of hikes to tackle an anticipated economic recession in the United States, will provide a much needed respite for businesses and bank borrowers, said DAP Chairman and Bagan Member of Parliament Lim Guan Eng.

Responding to the central bank’s announcement today that it will retain the present OPR to accommodate and support economic growth, Guan Eng said there had been also an increase in investor and market confidence since the formation of the new unity government under Prime Minister Anwar Ibrahim in November last year.

This has been evidenced by the marked appreciation of the value of the ringgit against the US dollar from RM4.75 under the previous government to RM4.32 today, Guan Eng said in a statement here today.

“The principal reasons for interest rate hikes stem from the need by Bank Negara to contain inflation and also restrain the rapid descent of the value of the ringgit, which dropped to a record low against both the Singapore and US dollar under the previous government. Clearly, fears of inflation and a spiralling slide in the value of the ringgit have receded under the new unity government which is seen as a much safer bet for investors, horrified at the prospect of an alternative incompetent, extremist and racist government.”

Bank Negara had carried out a series of interest rate or OPR hikes last year by 1 percent due to the previous failures to check both inflation and the rapid slide in the value of the ringgit. Despite nearly RM 600 billion being pumped in by the Muhyiddin administration, economic growth remained anaemic, raising doubts as to the efficacy of the public funds spent.

By halting interest rate hikes, the government will have an opportunity to address slower growth brought about by the US recession. Restraining borrowing costs will help to ease the cost pressure on individual and bank borrowers and boost higher consumption spending. The halt in interest rate hikes is a small Chinese New Year ang pow given to borrowers and hopefully will allow the new unity government to give its full attention to reduce business costs whilst generating more business opportunities.

–WE