Guan Eng: Bank Negara should maintain freeze on interest rate hikes

 

Bank Negara has been urged to continue its policy of holding off on hiking interest rates through the Overnight Policy Rate (OPR).

Former finance minister Lim Guan Eng said Bank Negara should align itself with the new policies of Prime Minister Anwar Ibrahim’s government by focusing on his three key priorities.

“These are to rein in any increases in the cost of living, generating economic growth in the face of a global slowdown and combating corruption.

“Bank Negara had highlighted six key policy priorities for reforms, namely, digitalisation, fiscal resilience, climate resilient economy, growth potential, future-ready workforce and social protection,” he said in a statement today.

Whilst the six key structural reforms Bank Negara governor Nor Shamsiah Mohd Yunus proposed to enhance Malaysia’s competitiveness and growth potential are a desired long-term goal, Lim (above) said Anwar’s three key goals should be prioritised.

“(This is) to ensure racists and extremists don’t undermine the stability of the unity government,” he added.

Political stability

The Bagan MP called on Bank Negara to actively assist the government in establishing political stability.

Lim said this will help investors feel reassured of a progressive, competent, transparent and inclusive administration, instead of an extremist, racist, incompetent and dishonest government devoid of any rational economic planning.

Bank Negara governor Nor Shamsiah Mohd Yunus

“The first step that Shamsiah should do is to arrest any increase in the cost of living by continuing its pause of OPR hikes to cushion individual and business borrowers from added financial costs.

“With inflation moderating to 3.7 percent in February, there is no need for any interest rate hikes,” he added.

Lim noted that Bank Negara’s interest rate pause had not caused the value of the ringgit to depreciate against the US dollar, which has appreciated from a low of RM4.75 under the previous administration to RM4.41 today.

“In other words, hikes or cuts in the OPR have no discernible effect on the value of the ringgit against the US dollar, which is determined by external factors beyond the country’s control.

“Bank Negara should show it has a heart for small businesses and individuals by continuing its pause of any hikes in the OPR,” he said. - Mkini