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KUCHING, May 15: The increase in the overnight policy rate (OPR) will help to stabilise the Malaysian ringgit against other currencies and reduce imported inflation.
Sarawak United Peoples’ Party (SUPP) Stakan branch chairman Dato Sim Kiang Chiok said with the OPR increase, Malaysia’s interest rate will be competitive against the first world market as the United States of America and the United Kingdom are also raising their rates to control their inflation.
He also mentioned that the rise in inflation was caused by disruption to the supply chain due to the Ukraine-Russia War and China’s Covid-19 lockdowns.
“In Malaysia, we will see higher wages setting in June due to the increase in the minimum wage from RM1,200 to RM1,500, which will also cause higher prices for our goods and services.
“With the increase in interest rate, buying of houses and cars through bank loans will be more costly for Malaysians.
“Those who have existing bank loans might have to pay higher loan repayments or extended loan repayment period, which will slow down the demand and thus cause inflation,” he said in a statement today.
However, Sim stressed that the country is continuing with price control on its oil and gas and essential items, which will help control inflation and the cost of living.
“The rise of interest rate will help strengthen Malaysian ringgit but will affect the cost of capital while saving rates will also increase,” he added.
On May 11, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to increase the OPR by 25 basis points to two per cent.
Thus, the ceiling and floor rates of the corridor of the OPR are increased to 2.25 per cent and 1.75 per cent, respectively. — DayakDaily