News: Bank Negara Cuts OPR To 3%

May 8, 2019

Bank Negara Malaysia’s Monetary Policy Committee has decided to slash the overnight policy rate (OPR) by 25 basis points to three percent – its first cut since July 2016. With this, the ceiling and floor rates of corridor for the OPR are lowered to 3.25 percent and 2.75 percent respectively.

Bank Negara noted that the baseline projection is for the country’s economy to increase within the projected range of 4.3 percent to 4.8 percent, reported The Star.

“However, there are downside risks to growth from heightened uncertainties in the global and domestic environment, trade tensions and extended weakness in commodity-related sectors,” it said.

Although domestic monetary and financial conditions are supportive of economic growth, several signs of tightening of financial conditions were seen.

“The adjustment to the OPR is therefore intended to preserve the degree of monetary accommodativeness,” said Bank Negara.

READ MORE: How is OPR related to Base Lending Rate and can affect a property seeker? 

“This is consistent with the monetary policy stance of supporting a steady growth path amid price stability. The MPC will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation.”

Looking ahead, the central bank expects the slowing global demand conditions as well as subdued growth of major trading partners to continue to weigh on Malaysia’s external sector.

Bloomberg reported that Malaysia is the second Asian country to reduce interest rates this year. The first was India, while the Philippines and New Zealand are expected to ease interest rates this week.

 

Image source from Bank Negara Malaysia

 

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