INTEREST RATE HIKE, HARGA BARANG AKAN NAIK GILA LAGI. When the Central Bankers and the Civil Servants Do Not Understand Business, Finance or the Economy.

 

A friend of mine sent me this:

Economists sitting behind their wooden desks and office chairs - what do they know about economic resilience? The 25 bp increase in OPR has resulted in an equivalent increase in BLR, which is what retail loans and mortgage loans are based on. 

It will result in more consumer distress, more bankruptcies. In the meantime, banks are NOT rushing to increase savings rates or fixed deposit rates.

So who benefits ? What good does it do to follow US interest rates when our economic situation is different ? When our objectives are different ?

I say we should LOWER interest rates, and not increase them.

https://www.malaysiakini.com/news/663984

Inflation is NOT the problem, unlike the US. 

Our problem now is bankruptcies, unemployment, no new investment. Just walk around the malls, so many businesses are closing.

My client submitted a tender for an RM500m project in early 2022.  In May, they were announced as the lowest bidder. Other bidders protested, lodged MACC reports about bribery. So the process got delayed for 12 months and my client was only notified as the winning bid last month.

One year of work is lost. One year of employment for 200 employees is lost. For the civil servants, they lost nothing....

My Comments:

The World Economic Forum, the IMF and the World Bank nutjobs are always keen to raise the interest rates. This is what is happening in the USA and elsewhere. As a result their consumers are paying more to the bankers for housing loans and car loans. The bankers are getting richer without any increase in their actual costs of running a bank.

It is just a magic wand. The Federal Reserve Bank of the US or the Bank Negara Malaysia simply raises the OPR or the Reserve Rates and voila, by magic, the banks also have to increase their interest rates.

Tuan-Tuan please check your next monthly instalment payments for your housing loans and car loans. They will increase accordingly.

Businesses who have bank loans have no choice but to increase their prices to pass through these higher costs of doing business. The people will suffer.

The banking oligopoly will make super duper profits without any extra risk or effort. 

There will be more bankruptcies. There will be more unemployment.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.