FORMER finance minister Lim Guan Eng has lambasted Bank Negara Malaysia’s (BNM) recent decision to raise the overnight policy rate (OPR) by 25 basis points (bps) to 3%, arguing that hikes in OPR benefitted no one except the banking sector.
According to the DAP chairman, there is no reason for BNM to increase the OPR now when the core inflation has been slowly reined in but instead paused OPR hikes in January and March when the inflation rate was higher.
“Despite BNM not hiking up the OPR in January and March this year, both headline inflation and core inflation dropped to a 34-month low of 3.4% and 3.8% respectively in March 2023.
“The hikes in OPR have benefitted no one except the banks,” he said in a statement today.
The Bagan MP went on to note that analysts at Hong Leong Bank had estimated that over a one-year forward earnings, a 25-bps rate hike would nudge up the banks’ net profit by 3.7% or slightly more than RM1 bil to RM30.07 bil from RM28.99 bil forecasted earlier.
“Have banks not earned enough?” he demanded.
On May 3, BNM had raised the OPR by 25 bps from 2.75% to 3%. The central bank had earlier paused its rate hike cycle in January and March after raising it by 100bps or 1% last year as inflation surged following the COVID-19 pandemic and in the aftermath of the Russian-Ukrainian conflict.
In an earlier statement announcing the latest OPR hike in May, BNM said it will continue to ensure that the monetary policy stance remains consistent with the outlook of domestic inflation and growth. – May 24, 2023
