Economy Minister Rafizi Ramli has dismissed concerns from Pasir Gudang MP Hassan Abdul Karim that the recent overnight policy rate (OPR) hike by Bank Negara would negatively impact the coalition government in the upcoming state elections.
According to Malay Mail, Rafizi said he had a lengthy discussion with Hassan prior to the latter's public statement urging clarification from the former and Prime Minister Anwar Ibrahim about the 25-basis point increase.
“We met on Friday, the night before he made the statement. I told him not to follow the opposition’s sentiments.
“If he is afraid that the OPR and EPF (Employees Provident Fund) issues will affect the votes in the upcoming state elections, he is wrong; there are more factors that will affect the voting. I already told him that,” the minister was quoted as saying by Malay Mail.
Rafizi (above, left) also advised Hassan that he could always get in touch with him or even Anwar to ask questions about these and other matters.
The minister stated that despite not receiving a personal briefing from Bank Negara regarding its justification for increasing the OPR to 3.0 percent, he agreed that the move was required to support the ringgit's value on the foreign exchange market.
In addition, he noted that this growth went against the regional norm because it was the first following two pauses.
“If we don’t raise it, we might have a problem in attracting and retaining foreign investors into Bursa Malaysia. So, the increase is a long-term plan by Bank Negara.
“For example, if our interest rate is below three percent and Indonesia is around five percent, potential and current investors might look to Indonesia to invest in the stock market. There’s a big economic effect on our currency if Bank Negara didn’t raise it,” he said.
Rafizi stated that the government was also making efforts to lower inflation, which should lessen pressure on Bank Negara to continue raising the OPR.
On May 6, Hassan urged Anwar and Rafizi to explain to the rakyat the recent increase in Bank Negara's overnight policy rate (OPR) by 25 basis points to three percent.
He said this was because he does not want the disgruntled rakyat to "punish" the government over the matter in the upcoming elections in six states.
Hassan expressed concern that the increase would negatively impact middle- and low-income earners and potentially harm the government's chances in upcoming state elections.
When announcing the current rise, Bank Negara stated that it was necessary to normalise monetary accommodation since the economy was resilient and it needed to control persistent inflation. - Mkini
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